University  of  California  •  Berkeley 


PRINTED  BY 

STONER  &  HUGHES 

WASHINGTON,  D   C. 

1912 


HISTORY  OF  THE 

First  Mortage  30-Year  6  per  cent  Paramount  Lien  Bonds  Having  Priority 

Over  the  Subsidy  Bonds  of  the  United  States 

Issued  by  and  Assigned  to 

CHARLES   DURKEE 

from  1865  to  1869 
BY  THE 

UNION  AND  KANSAS  PACIFIC  RAILROAD  CO., 

And  The 

CENTRAL  AND  WESTERN  PACIFIC  RAILROAD 

COMPANY 

And  by  order  and  demand  of 

PRESIDENT  JOHNSON 

made  on  these  Railroads. 

They  deposited  the  bonds  so  issued  and  assigned  January,  1868,  and  January, 
1869,  with  the  Secretary  of  the  Treasury  as  collateral  to  be  surrendered  at  the 
completion  of  their  roads. 


Congress  by  joint  resolution  passed  April  10,  1869,  ratified  and  confirmed 
the  order  and  demand  made  on  the  railroads  by  the  former  President  and  the 
officials  of  the  Government  for  receiving  the  bonds  and  empowered  President 
Grant,  if  need  be,  to  demand  such  other  security  necessary  for  the  completion 
of  the  roads. 


That  the  Secretary  of  the  Treasury  ordered  said  bonds  to  be  transferred  as 
they  became  due  from  1895  to  1899  to  the  Sub-Treasury  of  New  York  for  re- 
demption and  payment  by  the  Railroad  Companies  or  their  agents. 

Demand  and  claim  are  made  now  for  principal  and  interest  the  Sub- 
Treasury  received  in  payment  for  the  bonds,  theproceeds  of  which  was  order- 
ed to  be  paid  to  Person  or  Persons  lawfully  entitled  to  the  same  by — 

PRESIDENT  McKINLEY. 

Feb.  8,  1898. 


By  Henry  J.  Hastings,  Administrator  de  bonus  non  cum  lestamento  annexo  of 
the  estate  of  Charles  Durkee,  deceased.  Issued  out  of  the  Probate  Court 
of  Kenosha  County,  State  of  Wisconsin,  December  19,  1911,  and  demand  is 
made  by  his  Agent,  Jacob  J.  Souder,  duly  appointed  by  order  of  Court,  De- 
cember 23,  1911. 

By  the  Hon.  George  W.  Taylor,  County  Judge. 

Of  the  County  Court  of  Kenosha  Connty, 

of  the  State  of  Wisconsin. 


THE  WEEKLY,  MILWAUKEE,  WISCONSIN. 
WEDNESDAY,  JANUARY  26,  1870. 

Hon.  Charles  Durkee,  late  Gov.  of  Utah  Territory,  died  in 
Omaha,  on  the  14th  instant,  of  pneumonia  while  on  his  way  to 
his  home  in  Kenosha,  Wisconsin.  This  will  be  sad  news  to 
his  many  friends  in  this  State. 

Mr.  Durkee  was  born  in  Royalton,  Vt.,  on  the  5th  day  of 
December,  1807.  He  had  therefore  just  entered  upon  his  six- 
ty-third year,  receiving  a  good  education  in  the  common 
branches,  he  began  life  as  a  merchant  and  removed  to  this 
State  at  an  early  day  in  its  settlement,  settling  in  Kenosha. 
He  entered  energetically  into  a  business  life,  but  soon  became 
prominent  in  politics.  He  was,  we  believe,  a  member  of  the 
Territorial  Legislature  for  one  or  more  sessions,  and  in  Nov., 
1848,  was  elected  a  member  of  Congress  from  the  first  district 
and  re-elected  in  Nov.,  1850.  On  the  first  of  February,  1855, 
after  an  exciting  contest  lasting  through  several  days,  Mr. 
Durkee  was  elected  to  the  U.  S.  Senate  for  six  years  from  the 
4th  of  March  following.  The  Republican  party  was  organized 
in  the  State  only  some  six  months  before  this  election  and  it 
had  but  a  majority  of  one  in  the  Legislature  on  joint  ballot  in 
the  Republican  caucus  for  the  nomination  of  a  candidate  for 
Senator.  Erasmus  Cole,  now  Associate  Justice  of  the  Su- 
preme Court  of  the  State,  received  a  large  majority  of  the 
votes,  but  he  failed  to  unite  the  party.  E.  D.  Holton  had  some 
friends.  Chancellor  Lathrop  some,  but  Durkee  more  than 
both  of  these,  and  after  several  ballots  it  was  found  that  Dur- 
kee was  the  only  man  upon  whom  they  could  unite,  and  he  was 
finally  elected  by  just  the  number  of  votes  required.  The 
Democrats  voted  Bryan  Kelbans,  Charles  Diven  and  James 
Daly,  the  former  receiving  most  of  the  party  vote. 

Mr.  Durkee  was  therefore  the  first  Republican  U.  S.  Sen- 
ator from  this  State,  though  of  Democrat  antecedents,  he  was 


a  strong  anti-slavery  man  and  in  the  fierce  contests  which 
raged  on  the  question  of  slavery  during  his  term  in  Congress, 
he  was  always  at  his  post,  always  true  to  his  principles  and 
always  brave  and  outspoken  in  his  warfare  upon  the  great 
cause  of  the  country — slavery.  Upon  the  expiration  of  his 
term  in  1862  he  was  succeeded  by  Totton  and  returned  to  pri- 
vate life.  In  1865  he  was  appointed  by  President  Johnson, 
Governor  of  Utah  Territory,  in  which  position  he  acquitted 
himself  with  credit  and  to  the  satisfaction  of  the  Government, 
failing  health  compelled  the  resignation  of  his  position  and  he 
was  returning  to  his  old  home  in  Kenosha  when  death  over- 
took him.  Not  brilliant  as  a  writer  or  orator,  he  acquired  and 
retained  the  confidence  and  respect  of  the  people  and  his  as- 
sociates in  office  by  his  wisdom,  integrity,  conditions,  and  in 
behalf  of  what  he  believed  was  right.  In  his  death  the  State 
has  lost  a  good  citizen  and  one  who  did  her  and  the  whole 
country  valuable  service. 


THE  HONORABLE  JAMES  R.  DOOLITTLE  was  born 
in  Hampton,  Washington  County,  New  York,  January  3, 
1815 ;  graduated  at  Geneva  College  in  1834 ;  adopted  the  pro- 
fession of  law,  and  was  admitted  to  the  Supreme  Court  of 
New  York  in  1837.  He  was  District  Attorney  for  several 
years  for  Wyoming  County,  New  York,  and  removed  to  Wis- 
consin in  1851 ;  was  chosen  Judge  of  the  First  Judicial  Cir- 
cuit of  that  State  in  1853,  but  resigned  in  1856.  He  was  elected 
a  Senator  of  the  United  States  in  1857,  for  six  years,  serving 
as  Chairman  of  the  Committee  on  Indian  Affairs,  and  as  a 
member  of  the  Committee  on  Foreign  Affairs,  Commerce,  and 
Military  Affairs.  He  was  also  a  member  of  the  Peace  Con- 
gress-of  1861.  In  1863  he  was  re-elected  for  the  term  ending 
in  1869.  During  the  summer  recess  of  1865,  as  a  member  of 
a  Special  Committee  of  the  Senate,  he  visited  the  Indian 
tribes  west  of  the  Mississippi  River. 

When  Mr.  Doolittle  moved  to  Racine,  Wisconsin,  in  1851, 
just  ten  miles  from  Kenosha,  the  home  of  Gov.  Durkee,  where 
he  moved  in  1837.  When  Mr.  Doolittle  was  chosen  judge  of 
the  first  Judicial  Circuit  of  that  State,  Kenosha  County  was 
in  this  circuit.  Mr.  Durkee  was  in  Congress  at  that  time; 
they  soon  became  fast  friends,  Mr.  Durkee  being  a  merchant 
of  large  interest  and  Mr.  Doolittle  a  lawyer.  Mr.  Durkee  was 
elected  to  the  United  States  Senate  in  1885,  Mr.  Doolittle  was 
elected  in  1857.  They  served  in  the  Senate  together,  and  be- 
came bosom  friends.  Mr.  Doolittle  was  his  attorney  in  all 
matters  he  had  in  Washington  and  looked  after  his  interest  in 
his  absence.  This  close  relation  as  attorney  and  client  had 
existed  until  the  death  of  Gov.  Durkee. 


HISTORY  OF  PACIFIC  RAILROAD  LEGISLATION 
AND  ORGANIZATION. 

The  project  of  a  railroad  to  the  Pacific  Coast  was  first 
brought  to  the  attention  of  Congress  in  1846,  by  Asa  Whit- 
ney of  New  York.  His  persistent  efforts  met  with  no  reward 
beyond  a  respectful  consideration  of  committees  and  vague 
and  aimless  debates  in  Congress.  But  the  acquisition  of  new 
Pacific  Coast  possessions,  and  the  discovery  of  gold  in  Cali- 
fornia, gave  the  scheme  a  new  interest  so  that  from  1848  to 
1860  Congress  addressed  itself  at  various  times  to  the  seri- 
ous consideration  of  the  subject. 

It  continued  to  be  a  prominent  topic  of  discussion  and  pub- 
lic interests  in  it  became  so  general  that  the  National  Conven- 
tion of  both  parties  in  1860  adopted  resolutions  in  favor  of 
granting  Government  aid  to  the  enterprise. 

Events  immediately  following  the  election  in  1860  forbode 
the  consideration  at  that  time.  Very  soon  after  the  opening  of 
the  war,  however,  the  necessity  for  closer  connection  and 
greater  facilities  for  intercourse  with  the  States  of  the  Pacific 
Coast  pressed  itself  upon  the  attention  of  the  Government  and 
of  Congress. 

It  will  be  observed  that  the  Hon.  Charles  Durkee  was 
elected  to  the  lower  House  of  Congress  from  the  first  District 
of  Wisconsin  is  1848,  and  re-elected  in,  1850  serving  until  1852. 
In  1855  he  was  elected  to  the  United  States  Senate  as  a  Re- 
publican six  months  after  the  Republican  party  was  born,  and 
served  until  March  4th,  1862.  All  during  his  time  of  service 
he  was  intensely  interested  in  the  building  of  Pacific  railroads. 
The  building  of  roads  was  now  urgent,  out  of  which  grew  the 
act  of  1862,  generous  as  they  seemed,  they  were  not  liberal 
enough  to  induce  the  investment  of  capital  sufficient  for  the 
purpose. 

1 


Very  little  progress  had  been  made  upon  it,  when  work  prac- 
tically ceased,  and  the  whole  business  was  at  a  standstill.  The 
next  step  was  the  application  to  Congress,  for  additional  legis- 
lation, the  necessity  of  which,  for  prompt  action,  had  to  be 
taken  for  by  the  Act  of  July  2,  18(52,  whereby  Congress  or- 
ders and  directs  that  the  corporation's  first  meeting  shall  be 
held  in  Bryan  Hall,  in  the  city  of  Chicago,  111.,  the  first  Tues- 
day in  September,  1862,  and  at  this  meeting  resolutions  were 
passed  to  raise  subscriptions.  The  whole  amount  of  subscrip- 
tion secured  that  day  was  the  pitiful  sum  of  $2,200,  hardly 
enough  to  pay  the  expenses  for  that  meeting,  so  that  Congress 
acted  promptly  on  the  application  and  passed  the  act  of  July 
2,  1864,  embodying  the  desired  amendments. 

The  act  of  1862  was  in  its  essence  a  war  measure ;  it  was  so 
regarded  in  all  the  discussions  that  look  place  upon  it  in  the 
Senate  and  House.  It  was  from  this  view  of  it  that  Mr. 
Lincoln  took  so  profound  an  interest  in  its  passage. 

On  the  29th  day  of  October,  1863,  a  permanent  organiza- 
tion of  the  corporation  was  effected,  the  Act  of  1864-  doubled 
the  land  grant  and  permitted  the  railroad  companies  to  issue 
their  first  mortgage  bonds  equal  in  amount  to  the  subsidy  debt 
with  a  priority  of  lien  over  the  Government  subsidy  bonds. 

After  the  acceptance  by  the  railroad  companies  Sept.  23, 
1864,  of  the  Hoxie  Contract,  Mr.  Durkee  qualified  as  his  bonds- 
man as  required  by  the  Interior  and  Treasury  Departments, 
and  when  it  was  necessary  to  provide  $1,600,000  to  carry  on 
the  work  on  the  Hoxie  Contract,  Dr.  Thos.  C.  Durant  sub- 
scribed $600,000,  most  of  this  was  Mr.  Durkee's  money  or 
that  he  secured  besides  his  share  of  the  money  needed  in 
the  preliminary  work  and  organization  of  companies.  It  was 
said  that  he  was  the  largest  individual  contributor  up  to  this 
time  and  for  this  and  many  years  of  service  rendered  he  had 


the  promise  of  the  railroad  companies  that  they  would  assign 
and  in  compliance  therewith  did  assign  all  their  first  mortgage 
paramount  lien  bonds  lawfully  prior  over  the  Government 
subsidy  to  him,  without  reservation  or  condition. 

On  July  18,  1865,  President  Johnson  appointed  Mr.  Durkee 
Governor  of  the  Territory  of  Utah,  and  he  left  for  his  post  of 
duty  in  November  following,  the  railroads  went  on  building 
their  roads  and  received  their  subsidy  bonds.  Up  to  the  lat- 
ter part  of  I860  or  1867  when  the  administration  and  Con- 
gress were  divided  on  all  Government  matters,  when  Congress 
talked  of  impeaching  the  President,  and  the  press  of  the  coun- 
try assailed  the  Administration  on  all  sides.  The  press  as- 
sailed the  Secretary  of  the  Treasury  in  particular,  accusing 
him  of  being  in  league  with  a  band  of  Pacific  Railroad  swind- 
lers, helping  them  to  bankrupt  the  country  with  building  two 
streaks  of  rust  through  a  barren  wilderness  that  would  not  be 
inhabited  or  settled  in  a  hundred  years,  and  for  this  reason  the 
national  credit  was  threatened  and  assailed  on  all  sides.  At 
this  time  it  was  found  that  the  railroads  had  failed  or  refused 
to  make  the  required  statement  under  oath  as  set  forth  in  Sec- 
tion 5,  of  the  Act  of  1862,  and  the  lOfh  and  llth  sections  of 
the  amended  Act  of  1864,  and  at  a  cabinet  meeting  held  the 
Secretary  of  the  Treasury  and  the  Secretary  of  the  Interior 
brought  the  Pacific  Railroad  matters  to  the  attention  of  the 
cabinet  that  the  railroads  had  failed  or  refused  to  comply  with 
the  sections  of  the  acts  as  aforesaid,  and  further  stated  that  to 
their  absolute  knowledge,  not  one  of  the  first  mortgage  para- 
mount lien  bonds  so  far  issued  by  the  railroads  had  been  used 
in  the  building  of  the  roads,  but  were  in  safe  deposit  vaults  in 
New  York.  It  was  therefore  unanimously  resolved  by  the  cabi- 
net that  no  more  subsidy  bonds  should  be  issued  to  the  Pacific 
railroad  companies  until  they  would  deposit  as  collateral  with 


the  Secretary  of  the  Treasury  all  their  first  mortgage  para- 
mount lien  bonds  so  far  issued  and  to  be  issued,  and  author- 
ized and  directed  the  President  to  issue  an  order  to  this  effect 
and  notify  the  railroad  companies  that  until  this  order  was 
complied  with  no  more,  subsidy  bonds  or  land  grant  patents 
should  be  issued. 

When  this  order  of  the  President  became  known,  the  rail- 
road press  commenced  to  assail  the  Administration  shame- 
fully, and  the  Secretary  of  State,  Mr.  Seward,  and  Secretary 
of  the  Treasury,  Mr.  McCulloch,  in  particular,  threatening 
them  with  impeachment  for  violation  of  law  and  preventing 
the  railroad  companies  from  completing  the  roads  in  the  time 
allotted  them  by  the  acts  of  Congress.  Resolutions  were  of- 
fered in  both  Houses  of  Congress  to  impeach  Mr.  Seward  and 
Mr.  McCulloch,  Secretaries  of  State  and  Treasury,  respec- 
tively, and  every  effort  was  made  to  drive  -them  out  of  the 
Cabinet,  but  without  avail.  All  through  the  year  of  1867,  not 
one  subsidy  bond  or  land  grant  patent  was  issued  to  the  com- 
panies after  it  was  found  the  Administration  could  not  be 
moved  from  its  position,  the  railroad  companies  offered  to 
comply  with  the  order*  of  the  President,  and  on  Jan.  1,  1868, 
the  Government  issued  to  the  Union  Pacific  Railroad  Com- 
pany $17,342,512  in  subsidy  bonds  and  delivered  them  to  E. 
H.  Rollins,  the  Secretary  of  the  Company,  and  on  or  about  the 
same  day,  E.  H.  Rollins,  as  Secretary  of  the  Union  &  Kansas 
Pacific  Railroad  Companies,  under  a  power  of  attorney  from 
Charles  Durkee  and  in  the  presence  of  his  attorney,  the  Hon. 
Jas.  R.  Doolittle,  deposited  with  the  Secretary  of  the  Treas- 
ury as  collateral  $30,372,512,  part  of  their  first  mortgage  para- 
mount lien  bonds  they  were  then  entitled  to  under  their  chart- 
er and  all  assigned  to  Charles  Durkee,  and  likewise  on  Jan.  1, 
1869,  E.  H.  Rollins  as  Secretary  of  the  Union  &  Kansas  Pa- 


cific  Railroad  Companies  under  a  power  of  attorney  from 
Charles  Durkee,  and  in  the  presence  of  his  attorney,  Hon.  Jas. 
R.  Doolittle,  deposited  with  the  Secretary  of  the  Treasury  as 
collateral,  the  balance  of  the  paramount  lien  bonds  they  were 
entitled  to  under  their  charter  to  the  amount  of  $3,157,000, 
all  assigned  to  Charles  Durkee,  for  the  Union  Pacific  Railroad 
Company  $27,229,512,  and  for  the  Kansas  Pacific  Railroad 
Company  $6,303,000,  making  in  all  for  the  two  roads  $33,- 
593,512  of  their  first  mortgage  paramount  lien  bonds  so  de- 
posited with  the  Secretary  of  the  Treasury,  as  collateral  to  be 
surrendered  when  the  roads  were  reported  completed. 

On  the  same  day,  Jan.  1,  1868,  C.  P.  Huntington,  President 
of  the  Central  &  Western  Pacific  Railroad  Company,  de- 
posited as  per  order  of  the  President  of  the  United  States,  un- 
der a  power  of  attorney  from  Charles  Durkee,  and  in  the  pres- 
ence of  the  Hon.  Jas.  R.  Doolittle,  the  attorney  for  Mr.  Dur- 
kee, for  the  Central  Pacific  Railroad  all  their  first  mortgage 
paramount  lien  bonds  they  were  entitled  to  under  their  charter 
and  all  assigned  to  Chas.  Durkee,  to  the  amount  of  $25,885,- 
120,  issued  from  July  1,  1865,  to  Jan.  1,  1868,  likewise  the 
same  day  under  a  power  of  attorney  from  Chas.  Durkee  and 
in  the  presence  of  Jas.  R.  Doolittle,  Mr.  Durkee's  attorney,  the 
first  mortgage  paramount  lien  bonds  and  all  assigned  to  Chas. 
Durkee,  all  the  Western  Pacific  Railroad  Co.  was  entitled  to 
under  their  charter  to  the  amount  of  $1,970,560  issued  from 
Dec.  1,  1865,  to  July  1,  1869,  making  in  all  $27,855,680  face 
value,  30-year  6  per  cent  paramount  lien  bonds  for  the  Cen- 
tral and  Western  Pacific  Railroafls  and  for  the  Union  &  Kan- 
sas Pacific  Railroad  $33,539,512  they  deposited  at  the  same 
time  .and  conditions  as  herein  recited,  their  first  mortgage  par- 
amount lien  bonds  making  in  all  for  the  four  roads  the  face 
value  of  $61,395,192.  All  these  deposits  apparently  were  made 


under  protest  by  the  railroad  companies  that  the  demand  of 
the  President  of  the  United  States  was  illegal  and  without 
warrant  of  law,  but  as  recited  before  that  the  Administration 
acted  under  Section  5  of  the  Act  of  1862  and  Sections  10  and 
11  of  the  amended  Act  of  1864.  The  President  made  re- 
peated request  to  Congress  by  special  messages  for  more  spe- 
cific law,  but  Congress  was  slow  to  give  the  President  more 
power  under  the  strained  conditions  between  the  Administra- 
tion and  Congress.  However,  Congress  did  give  the  Adminis- 
tration some  relief  by  the  Act  of  Jan.  25,  1868,  but  not  what 
they  asked  for  or  what  Congress  gave  President  Grant,  April 
10,  1869.  This  power  was  given  President  Grant,  as  the  de- 
bates in  special  session  clearly  show,  to  cure  any  defects  or 
acts  of  the  former  administration ;  this  act  of  April  10,  1869, 
also  authorized  and  directed  the  President  to  appoint  a  com- 
mittee of  five  men  to  go  over  the  roads  and  see  if  the  roads 
were  finished  as  directed  by  the  acts  of  Congress,  thereupon 
the  President  appointed  five  men,  known  in  history  as  the  five 
eminent  men.  The  Committee  was  as  follows :  Hiram  Wai- 
bridge,  E.  F.  Winslow,  S.  N.  Fenton,  C.  P.  Cornstock  and  J. 
F.  Boyd,  and  they  entered  upon  their  duties  in  May,  1869,  and 
after  going  over  the  roads  returned  to  Washington  about  Oct. 
1,  1869,  took  rooms  at  the  Interior  Department  to  complete 
their  report  and  on  Oct.  30,  1869,  they  filed  an  oracular  report 
with  the  Secretary  of  the  Interior  that  in  the  opinion  of  the 
Commissioners  the  requirements  of  the  law  satisfied  and  the 
designs  of  Congress  carried  out,  that  the  roads  had  good  and 
•  substantial  road  beds,  etc.,  a'nd  on  Oct.  12,  1869,  the  Hon. 
Jas.  R.  Doolittle  arrived  in  Washington  knowing  that  the  com- 
missioners would  soon  report.  As  attorney  for  Charles  Pur- 
kee  on  the  1.4th  of  Oct.,  he  called  on  the  President  and  Sec- 
retary of  the  Treasury  about  the  interests  of  Mr.  Durkee,  and 

6 


on  Nov.  11  called  again  on  the  President  and  the  Secretary  of 
the  Treasury  and  had  long  interviews  on  these  matters,  and  on 
the  25th  of  Nov.,  1869,  he  called  again  in  company  with  C.  P. 
Huntington  and  E.  H.  Rollins,  who  held  the  powers  of  attor- 
ney of  Charles  Durkee,  respectively,  and  in  conversation  with 
the  Secretary  of  the  Treasury  that  the  committee  appointed 
by  the  President  had  made  a  report  to  the  Secretary  of  the  In- 
terior, that  the  roads  were  finished  according  to  the  acts  of 
Congress,  and  in  accordance  with  the  agreement  under  which 
they  put  up  their  collateral  they  thought,  having  complied  with 
the  law,  that  they  were  entitled  to  the  surrender  of  their  col- 
lateral. The  Secretary  answered  he  thought  so,  too,  and  that 
he  would  surrender  it,  but  before  he  would  do  so  he  thought 
rhat  inasmuch  as  the  Interior  Department  had  the  building 
of  the  roads,  that  it  was  no  more  than  right  to  notify  the  Sec- 
retary of  the  Interior  that  he  intended  to  surrender  the  col- 
lateral deposited  by  the  railroads  and  upon  this  decision  Mr. 
Doolittle  called  on  the  President  as  per  understanding  had 
with  him  and  the  Secretary  of  the  Treasury,  and  requested 
the  President  to  telegraph  Gov.  Durkee  that  his  resignation 
was  acceptable.  Mr.  Durkee  wired  his  resignation  that  sane 
day,  and  the  President  accepted  it.  Mr.  Durkee  settled  his 
affairs  as  Governor  of  Utah  and  also  with  the  firm  of  J.  W. 
Kerr  &  Co.,  in  which  concern  he  owned  a  large  interest,  and 
then  he  made  his  way  east  as  fast  as  possible.  While  en 
route  he  became  seriously  ill  and  had  to  stop  off  at  Omaha, 
where  he  went  to  a  hotel  and  where  he  died  on  the  14th  day 
of  January,  1870,  and  with  him  died  the  powers  of  attorney. 
Secretary  Boutwell  in  the  meantime  called  the  attention  of  the 
Secretary  of  the  Interior  that  he  proposed  to  surrender  the 
collateral  he  held  of  the  Pacific  Railroads,  but  before  doing 
so  he  though  he  would  like  to  call  his  attention  to  it.  The 


Secretary  of  the  Interior  remarked  that  he  wanted  a  little 
time  to  go  over  the  matter  with  his  subordinates,  that  there 
had  been  so  much  scandal  with  the  Pacific  Railroads  that 
he  did  not  know  enou'gh  about  it  to  give  a  defi- 
nite answer.  But  said,  I  presume  I  will  do  just 
what  you  proposed  to  do  after  I  look  into  it.  Of  course 
with  the  death  of  Gov.  Durkee  matters  were  at  a  standstill, 
and  very  little  was  done  to  secure  these  paramount  lien  bonds 
for  the  reason  reckless  charges  had  been  made  to  Congress 
by  the  press  and  individuals,  that  fabulous  profits  had  been 
made  by  the  builders  of  the  roads  and  great  frauds  and  brib- 
eries had  been  committed  by  the  companies  so  that  Congress 
appointed  two  committees,  the  Poland  Committee,  whose  in- 
vestigation lasted  until  December,  1872,  and  the  Wilson  Com- 
mittee whose  investigation  lasted  until  1873.  Everybody  that 
was  in  anyway  connected  with  the  building  and  financing  the 
roads  was  a  thief  without  proof.  This  investigation  kept  up 
for  two  or  three  years.  When  the  Refunding  Act  was  passed 
to  refund  the  National  Debt  from  a  6  per  cent  to  a  3^  arrd  4 
per  cent,  the  Pacific  Railroads  were  included  in  this  act  for  the 
reason  the  Government  was  responsible  for  principal  and  in- 
terest of  these  bonds. 

Soon  after  the  passage  of  the  refunding  act  two  contracts 
made  their  appearance,  one  of  the  officers  of  the  Union  and 
Kansas  Pacific  Railroads,  as  individuals,  and  the  other  officers 
of  the  Central  and  Western  Pacific  Railroads,  as  individuals 
claiming  that  these  contracts  were  made  with  them  by  Mr. 
Durkee,  and  the  parties  named  in  the  contract,  setting  forth 
their  respective  interest.  They  appeared  before  the  Secretary 
of  the  Treasury,  John  Sherman,  with  briefs  and  contracts  set- 
ting forth  their  Several  interests,  and  after  a  lengthy  confer- 
ence, the  Secretary  said  that  he  wanted  time  to  look  it  over  and 

8 


decide  what  he  would  do.  After  some  time  Dr.  Thomas  C. 
Durant  and  C.  P.  Huntington  received  letters  from  the  Secre- 
tary of  the  Treasury  that  he  was  perfectly  willing  to  refund 
the  first  mortgage  paramount  lien  bonds  of  the  Pacific  Rail- 
roads for  3^2  per  cent  U.  S.  bonds,  but  in  doing  so,  the  first 
mortgage  bonds  had  to  be  transferred  to  the  Government  of 
the  United  States,  that  the  Solicitor  of  the  Treasury  decided 
that  the  claimants,  by  contract,  could  not  make  a  transfer  of 
the  bonds  to  the  Government  that  would  hold  in  law  or  would 
it  vest  the  title  to  the  bonds  absolute  in  the  Government  for 
the  reason  that  the  bonds  were  all  assigned  to  Charles  Durkee 
without  qualification,  that  Mr.  Durkee  being  dead  nothing 
short  of  an  executor  or  administrator  duly  appointed  by  the 
Probate  Court  of  Kenosha,  Wisconsin,  where  Mr.  Durkee's 
will  was  filed  and  probated,  that  he  would  suggest  to  the 
parties  at  interest  to  go  to  Kenosha,  Wisconsin,  and  lay  the 
matter  before  the  Probate  Court  there  with  a  statement  under 
oath  of  the  facts  as  they  appear  here,  and  pray  the  court  to 
make  an  order  authorizing  and  directing  the  executor  or  ad- 
ministrator to  come  to  Washington  and  transfer  all  the  first 
mortgage  paramount  lien  bonds  of  the  Pacific  Railroads  held 
by  the  Government  and  assigned  to  Mr.  Durkee,  and  assign 
them  to  the  Government  of  the  United  States  for  3^  per 
cent  U.  S.  bonds  to  be  issued  by  the  Secretary  of  the  Treasury 
in  exchange  for  said  bonds,  and  then  and  there  divide  them 
as  per  contract  on  file  in  the  Department,  but  they  failed  to 
go  to  Kenosha,  Wis.,  as  requested  by  the  Solicitor  to  ask  the 
court  for  the  order  for  the  reason  they  were  unwilling  to  make 
the  required  oath  to  the  court  as  to  their  ownership  for  the 
reason  that  they  had  already  testified  before  several  Congres- 
sional committees  they  had  no  interest  in  the  bonds  so  that 
they  could  not  comply  with  the  Secretary's  request,  they  still 

9 


had  hope  that  some  way  would  open  that  they  could  get  their 
part  without  going  to  Kenosha,  Wis.,  before  the  Probate 
Court  there,  that  the  Secretary  might  be  persuaded  to  accept 
their  transfer,  but  the  Solicitor  refused  to  change  his  former 
ruling  that  they  could  not  by  their  assignment  of  the  bonds 
put  absolute  title  in  the  Government. 

After  the  passage  of  the  act  of  May,  1878,  known  as  the 
Thurman  Act,  it  was  thought  that  it  would  give  the  claimants 
by  contract  a  different    status  before    the    Secretary  of  the 
Treasury,  another  attempt  was  made  but  the  Secretary  was 
unwilling  to  yield  from  his  former  decision,  that  the  Thurman 
Act  did  not  change  his  power,  that  he  had  all  the  power  grant- 
ed him  under  the  refunding  act,  and  that  he  was  then  willing 
to  act  provided  the  title  to  the  bonds  could  be  legally  trans- 
ferred to  the  Government  of  the  United  States  so  that  they 
would  become  the  sole  owner  of  the  bonds,  but  they  were  un- 
willing to  get  the  consent  of  the  court  as  suggested  to  them  by 
the  Solicitor,  that  they  would  rather  wait  for  a  new  and  more 
liberal  Secretary  of  the  Treasury.     When  Wm.  Windom  was 
appointed  by  President  Garfield  they  had  great  hopes  that 
they  would  succeed,  but  in  the  death  of  President  Garfield,  and 
later  the   sudden   death  of   Wm.  Windom,   in   New  York,  all 
the  attempts  by  the  contract  holders  ceased.     Dr.  Thomas  C. 
Durant,  who  was  the  most  persistent  of  all  the  contract  own- 
ers and  holders  and  the  prime  mover  in  the  attempts  to  re- 
ceive his  share  of  the  bonds  as  allotted  to  him  by  the  contract, 
but  his  death  soon  followed  and  nothing  further  had  been  done 
by  the  contract  holders,  as  far  as  known.    In  the  meantime  the 
railroads  made  efforts  to  comply  with  the  act  known  as  the 
Thurman  Act  of  May,  1878,  known  as  the  sinking  fund  acts, 
for  we  find  on  page  34,  Report  of  the  Commissioner  of  Rail- 
roads for   1882,  this  item:   "Interest  paid  on  first  mortgage 

10 


bonds  having  priority  of  lien  over  those  of  the  United  States, 
ledger  folio  (368),  $1,630,860.00  and  cash  payment  being  that 
portion  of  the  $1,850,000  named  in  section  4  of  the  acts  of 
May  7,  1878,  payable  into  the  sinking  fund  $450,719.36,  after 
here  follows  the  report  itself  for  1881." 

Franklin  H.  Head,  having  been  named  as  one  of  the  execu- 
tors in  Mr.  Durkee's  will  and  was  the  only  surviving  executor 
living.  In  1881,  Mr.  L.  C.  Blaisdell,  whose  wife  was  the 
nearest  heir  to  Charles  Durkee,  secured  powers  of  attorneys 
from  all  the  known  heirs  of  Charles  Durkee,  filed  a  petition 
in  the  Probate  Court  of  Kenosha  County,  Wisconsin,  where 
Charles  Durkee's  will  was  filed  and  probated  praying  the 
court  to  order  Franklin  H.  Head,  the  surviving  executor  of 
the  last  will  and  testament  of  Charles  Durkee,  to  file  his  ac- 
count and  the  court  so  ordered,  and  on  the  18th  day  of  Au- 
gust, 1881,  the  said  Franklin  H.  Head,  did  file  his  account  with 
the  court  and  asked  lien  to  be  discharged.  The  account  was 
accepted  by  the  court  and  his  final  discharge  ordered.  In  his 
final  account  he  asked  for  $5,000  for  professional  services  he 
rendered  the  estate  in  addition  to  the  regular  per  cent  he  was 
entitled  to  as  executor.  These  professional  services  consisted 
of  settling  large  accounts  in  the  State  of  Utah  and  said  services 
also  consisted  in  relieving  said  estate  from  liability  of  one 
hundred  and  fifty  thousand  dollars  on  two  certain  bonds  of  in- 
demnity to  the  United  States,  signed  by  said  Charles  Durkee 
in  his  lifetime,  that  it  was  necessary  to  go  to  Washington,  D. 
C.,  and  state  an  account  which  services  this  executor  per- 
formed. Not  stating  what  the  nature  of  these  bonds  were  and 
for  what  purpose,  Mr.  Blaisdell  entered  into  correspondence 
as  attorney,  in  fact,  for  the  heirs  of  Charles  Durkee,  deceased, 
with  the  Hon.  Charles  J.  Folger,  the  then  Secretary  of  the 
Treasury.  After  quite  a  lengthy  and  continued  correspondence, 

11 


the  Secretary  of  the  Treasury,  in  April,  1884,  invited  Mr. 
Blaisdell  to  Washington  where  he  met  the  Secretary  on  April 
22,  1884. 

C.  P.  Huntington,  in  1889  or  1890,  proposed  to  Mr.  Blaisdell 
if  he  would  give  him  power  of  attorney  such  as  was  approved 
by  the  Attorney  General  Brewster  and  a  contract  for  one-fifth 
of  the  Central  and  Western  Pacific  Railroad  bonds  that  he  was 
entitled  to  under  a  contract  made  with  Mr.  Durkee  he  would 
secure  the  bonds  from  the  Secretary  of  the  Treasury,  but  Mr. 
Blaisdell  refused,  and  nothing  came  of  it.  Mr.  Blaisdell  finally 
filed  for  the  heirs  their  claims  in  the  Court  of  Claims,  May, 
1893,  against  the  United  States,  No.  18,003,  after  it  was  be- 
fore the  court  for  a  year  or  more,  the  court  informed  Mr. 
Blaisdell  that  there  being  a  will  and  a  widow  living  the  heirs 
could  not  prosecute  and  advised  him  to  go  to  Kenosha  County 
court,  in  the  State  of  Wisconsin,  and  secure  from  the  Probate 
Court  of  said  county,  letters  of  administration  de  bonus  non 
with  the  will  annexed.  He  finally,  in  company  with  one  John 
A.  Kuykendall,  appeared  before  the  said  court,  but  the  court 
refused  to  grant  letters  unless  fuller  explanation  and  bond  was 
furnished  to  protect  the  county  from  cost.  This  they  failed  to 
do,  but  went  to  Salt  Lake  City,  Utah,  where  John  A.  Kuyken- 
dall claimed  a  residence,  and  in  April,  1896,  made  application 
to  the  then  District  Court  Probate,  Salt  Lake  County,  Utah,  for 
letters  of  administration  on  the  estae  of  Charles  Durkee,  de- 
ceased, without  filing  his  will  for  probate,  and  it  appears  that 
in  May,  1896,  the  court  did  grant  letters  of  administration  to 
him,  and  filed  a  bond  for  one  hundred  dollars.  Kuykendall 
and  Blaisdell  returned  to  Washington  with  a  view  of  filing 
with  the  Court  of  Claims  letters  granted  the  said  Kuykendall, 
but  the  court  refused  to  let  them  file  the  letters  for  the  reason 
that  the  said  Kuykendall  was  not  duly  appointed  administrator 

12 


of  the  estate  of  Charles  Durkee,  deceased,  by  any  order  duly 
made  by  the  Third  District  Court  Probate  Division  Salt  Lake 
County,  State  of  Utah,  on  the  9th  day  of  May,  1896,  or  any 
other  time,  and  for  that  reason  the  court  dismissed  him  from 
the  case;  later  that  both  could  not  prosecute  the  case  at  the 
same  time. 


FIRST  SESSION,  FIFTY-FIRST  CONGRESS. 
In  the  House,  Monday,  March  15,  1869. 

Mr.  Bingham  of  Ohio.  I  move  to  suspend  the  rules  in  or- 
der to  introduce  the  joint  resolution. 

Joint  Resolution  (H.  R.  26)  for  the  protection  of  the  in- 
terests of  the  United  States,  in  the  Union  Pacific  Railroad  and 
for  other  purposes,  was  read  first  time;  second  time  was  or- 
dered to  be  engrossed  and  read  a  third  time,  and  being  en- 
grossed it  was  accordingly  read  the  third  time.  Mr.  Bingham 
demanded  the  previous  question  on  the  passage  and  passed. 

When  the  Joint  Resolution  came  to  the  Senate  for  consid- 
eration, Senator  Stewart,  in  speaking  on  the  resolution,  re- 
marked :  I  have  on  my  desk  an  ornamental  looking  document 
with  the  name  of  James  Fisk  in  large  letters.  I  never  saw  him 
but  it  is  alleged  that  he  is  a  great  rascal  and  that  it  is  very  im- 
portant to  get  this  work  out  of  his  hands.  Again  he  said : 

But  if  there  is  danger  of  an  irresponsible  corporation  deal- 
ing out  the  proceeds  of  the  bounty  of  the  Government  till  it 
makes  the  Union  Pacific  Railroad  Company  insolvent  and  en- 
dangers the  lien  of  the  Government,  we  should  pause  in  our 
legislation  and  study  well  its  character.  I  would  go  as  far  as 
any  man  could  ask  me  to  go  to  protect  the  interests  of  the  Gov- 
ernment, nor  would  I  in  jure  any  man,  who  has  invested  in 

13 


Pacific  Railroads,  but  the  character  of  the  charges  is  such  that 
if  they  should  prove  true,  who  will  say  that  there  is  no  danger 
of  the  first  mortgage  bonds  being  foreclosed  so  as  to  cut  off  the 
lien  of  the  United  States.  If  that  should  occur  in  consequence 
of  the  companies  having  trade  too  large  dividend  or  unfortu- 
nate contracts  who  will  say  that  Congress  will  not  be  held  re- 
sponsible for  it.  In  Feb.,  1865,  I  think,  we  changed  the  law  of 
1864  so  that  the  bonds  of  the  companies  have  precedence. 
Now,  if  the  companies  shall  become  insolvent  what  is  to  be  the 
result?  These  first  mortgage  bonds  will  be  foreclosed  and  the 
Government  lien  cut  off. 

Senator  Sherman  said  I  believe  that  this  joint  resolution  as 
it  now  stands  will  give  us  every  guarantee  and  every  security 
that  we  can  possibly  have  for  the  completion  of  the  best  roads 
probably  in  the  world  because  the  whole  matter  will  now  be 
left  so  far  as  the  inspection  of  the  roads  and  its  construction 
is  concerned,  to  the  judgment  of  the  President  of  the 
United  States,  enlightened  as  it  will  be  by  all  the  infor- 
mation he  can  gain,  by  his  commission  and  by  the  engineers  he 
may  send  upon  the  route ;  and  this  joint  resolution  will  author- 
ize him  to  return  into  the  possssion  of  the  Government  ample 
security  for  the  completion  of  the  roads.  Having  accom- 
plished that  I  think  we  have  done  all  we  can  do  to  protect  the 
interests  of  the  Government. 

Senator  Casserly.  The  object  being,  of  course,  the  obtaining 
by  the  President  for  the  country  ample  security  that  these 
roads,  each  of  them,  shall  be  completed  as  first  class  roads,  ac- 
cording to  the  contract,  the  question  I  desire  to  ask  is,  What 
is  to  be  done  in  case  the  President  should  be  unable  or  unwill- 
ing to  obtain  by  the  voluntary  action  of.  these  companies  the 
security  pointed  out  if  one  or  both  of  these  companies  should 
not  be  able  to  furnish  a  sufficient  amount,  either  of  the  sub- 

14 


sidy  bonds  already  issued  or  first  mortgage  bonds,  what  then? 

Senator  Sherman  of  Ohio.  That  question  was  examined  by 
the  Pacific  Railroad  Committee.  In  the  first  place  the  con- 
tingency is  not  likely  to  arise,  because  either  company  has  suf- 
ficient bonds  yet  coming  to  it  or  still  in  the  possession  of  the 
Government  to  make  security  probably  amply  sufficient.  For 
instance,  the  Union  Pacific  Railroad  Company  has  already  de- 
posited, perhaps  without  any  authority  of  law,  their  first  mort- 
gage bonds  with  the  United  States  to  secure  the  completion 
of  their  road.  This  has  been  done  not  in  strict  pursuance  of 
law,  because  there  was  no  law  probably  that  could  have  re- 
quired or  authorized  the  officers  of  the  Government  to  receive 
them,  but  still  as  we  know  from  the  official  reports  that  an 
amount  of  bonds  has  been  deposited  already  with  the  Gov- 
ernment, then  there  is  still  a  large  amount  of  subsidy  bonds 
payable  to  the  companies  to  complete  their  lines  to  the  point 
agreed  upon,  so  that  the  case  put  by  the  Senator  from  Cali- 
fornia is  not  likely  to  arise,  and  if  it  does  arise,  the  law  is 
ample  now.  Here  the  authority  is  given  the  President. 

Again  Senator  Sherman  answers  the  Senator  from  Califor- 
nia, with  the  leave  of  my  friend  from  California  and  on  the 
suggestion  of  the  Senator  of  Iowa  (Mr.  Harlan),  I  will  state 
further  that  the  whole  grant  of  public  lands  to  both  these 
roads  up  to  this  time  is  withheld  partly  because  the  land  has 
never  been  surveyed  along  the  roads.  No  patents  have  been 
issued  for  any  portion  of  that  large  grant  so  that  we  have  in 
addition  to  the  bonds  now  deposited  and  bonds  to  be  issued 
hereafter  or  withheld  all  the  public  land  granted.  I  do  not 
know  how  valuable  they  are  but  they  will  be  a  very  large  and 
valuable  security  altogether. 

And  after  the  passage  of  the  joint  resolution  April  10,  1869, 
both  Houses  adjourned  without  delay. 

u 


CHAPTER  2 

THE    SUMMARY   OF   THE   RECORDS    AND    TESTI- 
MONY OF  THE  CASE  AS  PRESENTED  HERE. 

First,  that  the  Honorable  Charles  Durkee,  from  1848  to 
1870,  while  a  member  of  both  Houses  of  Congress  and  later 
Governor  of  the  Territory  of  Utah,  was  intensely  interested 
in  securing  favorable  legislation  for  the  building  of  the  Pa- 
cific Railroads,  in  the  securing  and  supplying  the  necessary 
money  in  the  promotion  and  organizing  of  the  companies,  that 
he  was  so  favorably  situated  and  financially  able  in  himself 
and  through  his  friends  to  accomplish  all  that  he  did  in  the 
advancement  of  this  stupenduous  enterprise.  The  Record 
discloses  that  while  in  both  Houses  he  was  always  at  his  post, 
brave  and  outspoken  on  all  matters  that  came  before  both 
Houses.  While  not  a  lawyer,  he  was  a  merchant  of  rare  abil- 
ity, and  entered  energetically  into  a  business  life  which 
brough  him  into  public  life  very  early  in  the  territory  of  Wis- 
consin. He  also  learned  early  in  his  business  life  the  import- 
ance of  a  good  faithful  lawyer  to  look  after  the  legal  end  o+ 
his  business,  it  was  but  natural  (being  associated  with  the 
Hon.  James  R.  Doolittle  in  his  neighborhood  as  a  lawyer  and 
judge,  in  his  own  town  of  Kenosha,  and  finally  served  with 
him  in  the  United  States  Senate)  that  their  confidence  and 
friendship  should  grow,  so  that  they  were  not  only  lawyer  and 
client,  but  more  than  that,  they  were  intimate  friends.  It  wa> 
well  that  he  should  have  secured  the  services  of  one  of  the 

16 


ablest  lawyers  of  his  day,  to  look  after  his  business  which  was 
of  such  great  importance  and  required  ability  and  skill  to  man- 
age and  bring  it  to  a  successful  issue.  These  requirements  the 
Senator  measured  up  to,  and  with  the  unbounded  confidence 
Mr.  Durkee  had  in  him,  made  it  so  much  easier  for  him  to  look 
after  his  interest.  In  April,  1S(>7,  he  made  arrangements  to 
go  to  Europe  in  the  interest  of  some  railroad  men,  with  a  view 
of  making  arrangements  with  some  foreign  banking  houses  to 
take  over  the  whole  issue  of  these  first  mortgage  paramount 
lien  bonds  of  the  four  Pacific  Railroads.  He  had  letters  of 
recommendation  from  Mr.  McCulloch,  the  Secretary  of  the 
Treasury,  to  bankers  abroad  giving  his  views  as  to  the  prob- 
able value  of  these  bonds,  and  in  the  meantime  Mr.  McCulloch 
informed  Mr.  Seward,  the  Secretary  of  State,  of  the  Senator's 
intentions  of  going  abroad. 

Mr.  Seward  immediately  got  in  communication  with  him 
and  told  him  that  he  would  like  him  while  abroad  to  go  to 
Denmark,  and  he  gave  him  official  authorization  to  treat  with 
Denmark  for  the  purchase  of  the  Island  of  St.  Thomas,  he  left 
for  Europe  May  11,  1867. 

Upon  his  return  from  abroad  he  found  that  the  strained 
condition  between  the  Government  and  the  railroads  had  so 
increased  and  was  so  intense  that  he  saw  that  if  these  bonds 
were  to  have  any  value  something  had  to  be  done  that  would 
bring  the  Government  and  railroads  together  to  some  under- 
standing, that  would  enable  the  railroads  to  co  nplete  the  roads 
or  they  would  forfeit  their  charter  and  their  bonds  would  be- 
come worthless,  so  he  set  about  to  get  the  railroads  to  com- 
ply with  the  demands  of  the  Government,  and  it  was  through 
his  work  and  influence  that  it  was  finally  accomplished  and 
the  bonds  were  deposited  as  before  recited.  It  will  be  observed 
that  he  was  the  administration  leader  in  the  Senate  which 


gave  him  power  and  influence  with  both  the  Government  and 
the  railroads  to  bring  about  the  settlement  of  these  difficulties 
which  had  arisen,  and  it  was  finally  arranged  and  the  bonds 
were  deposited  January,  1868.  He  knew  that  if  they  kept  up 
their  differences  that  the  project  would  fail,  and  they  would 
forfeit  their  charter,  and  with  it  would  go  the  paramount  lien 
bonds,  and  it  would  prevent  him  from  consummating  his 
foreign  deal  for  the  bonds  he  had  arranged.  All  the  efforts 
that  were  made  against  the  Secretary  of  State,  Mr.  Seward, 
and  the  Secretary  of  the  Treasury,  Mr.  McCulloch,  in  both 
Houses  of  Congress  were  held  up  through  his  influences  so  that 
no  report  from  any  committee  in  either  House  was  made. 

These  threatenings  went  on  all  through  the  Johnson  admin- 
istration. The  Senator's  term  expired  March  4,  186J),  but  it 
was  through  his  influence  that  the  first  session  of  the  Fifty- 
first  Congress  was  called  March  4,  1S(J!),  for  the  express  pur- 
pose to  pass  the  Act  of  April  10,  1S(><),  to  cure  whatever  de- 
fect there  was  in  the  law,  and  to  ratify  the  acts  of  the  outgoing 
administration,  and  to  vest  further  power  in  the  President, 
etc.,  and  to  relieve  the  incoming  administration  of  the  trouble 
the  former  administration  had  as  to  the  illegality  of  the  de- 
mands made  by  the  Government  on  the  Pacific  Railroad  for 
the  depositing  and  holding  of  their  first  mortgage  para  r,ount 
lien  bonds,  but  in  the  passage  of  the  Act  of  April  10,  1S(><). 
all  the  defects  in  the  law,  if  there  were  any,  placed  absolute 
power  in  the  President.  Soon  after  the  adjournment  of  Con- 
gress Senator  Doolittle  returned  to  his  home  in  Wisconsin, 
he  returned  again  to  Washington  on  the  12th  of  Oct.,  18(19, 
before  the  commission  appointed  by  President  Grant  made 
their  report,  and  to  attend  to  his  client's  business,  which  lie- 
did  to  the  day  of  his  death,  Jan.  14,  1870,  as  recited  before. 

The  statement  of  Senator  John  Sherman  on  the  floor  of  the 

18 


Senate  while  the  joint  resolution  which  passed  April  10,  1869, 
was  under  discussion,  is  absolute  proof  of  the  depositing  of 
the  bonds  before  the  joint  resolution  was  passed.  He  said, 
for  instance,  the  Union  Pacific  Railroad  Company  has  already 
deposited  perhaps  without  any  authority  of  law  their  first 
mortgage  bonds  with  the  United  States  to  secure  the  comple- 
tion of  their  roads.  This  has  been  done  not  in  strict  persuance 
of  law,  because  there  was  no  law  probably  that  could  have  re- 
quired or  authorized  the  officers  of  the  Government  to  receive 
them,  but  still  as  we  know  from  the  official  reports  that  an 
amount  of  bonds  has  been  deposited. 

Again,  when  he  was  Secretary  of  the  Treasury  he  showed 
his  willingness  to  surrender  the  bonds  under  certain  conditions 
as  set  forth  in  a  statement  made  before  and  which  is  part  of 
this  brief.  After  the  Thurman  Act  was  passed  May,  1878,  we 
find  that  the  railroads  were  trying  to  comply  with  this  act,  for 
in  1881  the  Union  Pacific  Railroad  Company  paid  into  the 
Treasury  of  the  United  States  "for  1881  interest  paid  on  first 
mortgage  bonds,  having  priority  of  lien  over  those  of  the 
United  States,  ledger  folio  (386),  $1,630,860.00.  See  Report 
of  the  Commissioner  of  Railroads  for  1882  (page  34)  ;  also 
paid  in  the  sinking  fund  $450,719.36  and  got  credit  for  half  the 
transportation  rendered  the  Government,  the  other  half  went 
to  the  credit  of  the  subsidy  tfebt." 

Now  comes  L.  C.  P>laisdell  as  attorney  for  the  heirs  of 
Charles  Durkee  with  letters  from  the  Secretary  of  the  Treas- 
ury, C.  J.  Folger,  to  Blaisdell,  1882.  From  Mr.  French,  As- 
sistant Secretary  of  the  Treasury,  Nov.  2S,  1HS2;  Comptroller 
Mr.  Lawrence  to  Blaisdell,  Aug. . 'M,  lss:j;  Mr.  Lawrence  to 
Blaisdell,  April  3,  1884,  and  from  Chas.  Coon,  Assistant  Sec- 
retary of  the  Treasury,  to  Blaisdell,  April  12,  1.S84,  request- 
ing him  to  come  to  Washington  for  a  conference  with  the  Sec- 

19 


retary  of  the  Treasury,  Chas.  J.  Folger.  Upon  this  invitation 
he  came  to  Washington  and  on  the  22d  day  of  April,  1S84, 
said  Blaisdell  was  presented  by  the  Hon.  Joseph  G.  Cannon  to 
the  Chief  Clerk  of  the  Treasury  Department,  Amos  Webster, 
with  instructions  to  call  together  such  officials  as  the  papers 
seem  to  require  and  to  present  said  Blaisdell  to  the  Secretary 
of  the  Treasury,  C.  J.  Folger,  Attorney  General  Brewster, 
Secretary  of  State  Frelinghuysen,  and  was  presented  to  quite 
a  number  of  other  officials  of  the  Treasury  Department  that 
were  present  at  this  ireeting  when  Secretary  Folger  exhibited 
all  the  Pacific  Railroad  bonds,  and  re  narked  to  Attorney  Gen- 
eral Brewster:  "Judge,  they  are  all  assigned  to  one  Chas. 
Durkee." 

The  following  affidavits  were  placed  on  file  in  the  Court  of 
Claims  of  nearly  all  the  parties  that  were  present  at  this  in- 
terview who  saw  the  bonds  and  the  assignment  on  the  bonds 
to  Chas.  Durkee.  The  first  that  filed  his  affidavit  was : 

A.  U.  Wyman,  Assistant  U.  S.  Treasurer,  affidavit  on  file. 

E.  B.  Daskam,  clerk,  Treasury  Department,  affidavit  on  file 

Wm.  Fletcher,  clerk,  Treasury  Department,  affidavit  on  file. 

Amos  Webster,  Chief  Clerk,  and  Assistant  Attorney  Gen- 
eral, affidavit  on  file. 

Chas.  Park.ham.  stenographer.  Treasury  Department,  affi- 
davit on  file. 

Dr.  Thomas  Robinson,  Solicitor  of  the  Treasury  in  1884,  was 
present  and  saw  the  bonds  and  assignment  to  Charles  Durkee ; 
swears  that  he  saw  the  bonds  and  assignment  before  and 
after  this  meeting  while  Solicitor ;  affidavit  on  file. 

Scott  Howell,  Des  Moines,  Iowa,  Blaisdell  attorney,  swears 
that  he  was  present  at  the  interview  with  the  Solicitor  of  the 
Treasury  at  which  records  of  the  delivery  of  the  bonds  to  the 
Secretary  of  the  Treasury  was  shown ;  affidavit  on  file. 


Hon.  Senator  S.  M.  Cullum  of  111.,  affidavit  on  file. 

Representative  Joseph  G.  Cannon,  111.,  affidavit  on  file. 

Hon.  J.  F.  Outhwite,  ex-member  of  Congress,  swears  as  to 
the  transaction  before  the  House  Committee  on  Pacific  Rail- 
roads held  shortly  after  the  death  of  Chief  Justice  Waite ;  af- 
fidavit on  file. 

Hon.  W.  M.  Springer,  ex-member  of  Congress  from  111., 
affidavit  on  file. 

Hon.  Wm.  H.  Armstrong,  Commissioner  of  Railroads  from 
1881  to  1885,  swears  as  to  the  order  he  received  from  Secre- 
tary Folger  as  to  what  he  is  to  do  hereafter  with  regard  to  the 
first  mortgage  paramount  lien  bonds  of  the  Pacific  Railroads ; 
affidavit  on  file. 

All  these  men  testified  from  personal  knowledge  of  the 
facts  as  sworn  to  and  filed  in  the  Court  oT  Claims  by  Mr. 
Mluisdell,  and  afterwards  sworn  to  before  the  Sub-Committee 
of  the  Senate  on  Pacific  Railroads  March  1!)  and  21,  1S9(>,  and 
filed  and  recorded  in  Senate  Document  No.  (314). 

All  this  testimony  and  statements  filed  by  .Mr.  Blaisdell  and 
his  witnesses  was  never  disputed  by  the  Government  at  any 
time  nor  did  tljey  attempt  to  produce  witnesses  at  any  time  to 
refute  the  testimony  produced  and  filed  both  in  their  depart- 
ment. Court  of  Claims,  and  before  the  Senate  Sub-Committee 
on  Pacific  Railroads. 

\Ye  also  produce  as  witness  Thomas  J.  Abel,  who  was  ex- 
amined before  Dudley  T.  Hassan,  an  Examiner  in  Chancery, 
and  sworn  on  the  20th  day  of  August,  1901,  that  he  was  pres- 
ent when  the  oath  was  administered  to  Mr.  ttlaisdell  before 
the  Senate  Sub-Committee  of  the  United  States  on  Pacific 
Railroads,  and  present  when  Mr.  Blaisdell  testified  and  filed 
his  sworn  statement  with  the  Committee,  March  1 9  and  March 
21,  1895. 

21 


We  now  present : 

William  R.  Russell,  being  first  duly  sworn  according  to 
law,  before  Dudley  T.  Hassan,  Examiner  in  Chancery,  on  the 
14th  day  of  November,  1901  ;  that  he  was  a  clerk  in  the  Treas- 
ury Department  for  twenty  years,  and  had  charge  of  the  bond 
vault  in  the  Treasury  office ;  that  the  first  mortgage  lien  bonds 
of  the  Union,  Kansas  Central  and  Western  Pacific  Railroads 
were  in  the  vault  he  had  charge  of ;  that  they  were  sent  to  the 
Assistant  Treasurer  at  New  York  by  messenger  for  the.  pur- 
pose of  redemption  by  the  railway  companies,  being  usually 
sent  in  advance  of  their  maturity.  I  took  some  of  them  to 
New  York  myself  and  delivered  them  to  the  Assistant  Treas- 
urer at  the  Sub-Treasury  at  New  York.  The  first  were  dated 
in  1865  and  were  30-year  bonds.  They  began  to  mature  in 
1895  from  that  time  on  to  1899  and  were  sent  out  as  fast  as 
they  became  due. 

Again,  they  were  Union  Central,  Eastern  Division  of  the 
Union,  Kansas,  Sioux  City  and  Western  Pacific  Railroad 
bonds. 

My  information  is  not  as  clear  on  the  Sioux  City  bonds  as 
to  the  ownership,  therefore  1  make  the  amount  $61,395,192 
(Souder). 

We  now  present  Cecil  Clay,  Chief  Clerk  of  the  Department 
of  Justice,  who  was  sworn  before  Dudley  T.  Hassan,  Exam- 
iner in  Chancery,  Sept.  3,  1901,  who  does  depose  and  say  that 
his  duties  are  to  receive  all  incoming  mails,  superintend  the 
filing  of  all  records  and  recording  all  correspondence  in  the 
Department  and  all  outgoing  mail ;  that  he  could  not  make  any 
statement  of  any  statements  or  reports  that  were  filed  in  the 
Department  without  the  permission  of  the  Attorney  General. 
See  his  affidavit. 

That  the  bonds  come  into  the  hands  of  the  Secretary  of  the 


Treasury  at  the  time  and  under  the  conditions  as  recited  in 
the  statement  that  they  come  there  by  law  and  were  held  as 
COLLATERAL  as  stated,  the  death  of  Mr.  Durkee  brought 
about  this  unfortunate  condition,  as  recited  in  the  statement. 

We  have  the  evidence  that  these  bonds  were  taken  out  of 
the  vaults  of  the  Treasury  Department  by  order  of  the  Sec- 
retary of  the  Treasury  as  they  become  due,  and  sent  to  the 
Sub-Treasurer  of  New  York  for  payment  by  the  railway 
companies,  and  we  have  good  reason  to  believe  that  they  were 
paid  by  the  companies.  Various  attempts  have  been  made  to 
secure  the  bonds  or  the  value  thereof  by  various  parties  as 
will  be  seen  in  the  statement  filed  herewith  in  all  these  efforts 
that  were  made  we  find  that  the  heirs  of  Charles  Durkee  made 
a  long  and  continued  attempt  to  make  the  collection  and  while 
before  the  Court  of  Claims  by  their  representative  attorney 
the  court  finally  decided  that  there  being  a  will  and  a  widow 
living  the  heirs  cannot  prosecute  nor  collect;  that  the  home 
of  Mr.  Charles  Durkee  was  in  Kenosha,  Kenosha  County, 
Wisconsin,  where  he  was  buried,  and  where  his  will  was  filed, 
proved  and  probated ;  that  nothing  short  of  an  administrator 
dc  bonus  non  with  the  will  annexed  could  prosecute  or  repre- 
sent the  estate,  and  therefore  would  dismiss  the  case  without 
prejudice. 

Part  of  the  Annual  Report  of  the  Attorney  General  for  Year 

of  1898. 

We  now  present  the  settlement  with  the  Pacific  Railroads 
with  the  Government  by  order  of  the  President : 

On  the  8th  day  of  February,  1898,  under  the  power  vested 
in  the  President  by  an  act  of  Congress,  entitled  "An  Act  au- 
thorizing the  investigation  of  the  book  accounts  and  methods 

23 


of  railroad  which  have  received  aid  from  the  United  States, 
and  for  other  purposes,"  passed  March  3,  1887,  President 
McKinley-  issued  an  executive  order  which,  after  reciting 
among  other  things  as  follows:  "Whereas,  in  the  opinion  of 
the  President,  it  is  deemed  necessary  to  the  protection  of  the 
interest  and  preservation  of  the  security  of  the  United  States 
in  respect  of  its  said  lien  and  mortgage  to  redeem  and  clear 
off  the  aforesaid  paramount  liens  and  incumberances  by  pay- 
ing the  sums  lawfully  due  in  respect  thereof  out  of  the  Treas- 
ury, so  that  the  United  States  shall  thereupon  become  and  be 
subrogated  to  all  rights  and  securities  heretobefore  pertaining  to 
liens  and  mortgages  in  respect  of  which  such  payments  shall 
be  made,"  authorized  the  Secretary  of  the  Treasury  to  pay 
out  of  the  Treasury  to  the  person  or  persons  lawfully  entitled 
to  receive  the  same  amounts  lawfully  due  upon  the  prior 
mortgages  upon  the  Eastern  and  Middle  Division  of  said  rail- 
road out  of  any  money  in  the  Treasury  not  otherwise  appro- 
priated. 

Part  of  the  letters  of  administration  of  the  Kenosha  County 
Court,  in  Probate. 

STATE  OF   WISCONSIN,          )  ^. 
County    of    Kenosha.       ( 

THE  STATE  OF  WISCONSIN,  TO  ALL  TO  WHOM 
THESE  PRESENTS  SHALL  COME,  AND  ESPECIAL- 
LY TO  HENRY  I.  HASTINGS,  OF  THE  SAID  COUN- 
TY, GREETING:* 

Know  ye  that,  whereas  Charles  Durkee,  late  of  the  City 
of  Kenosha,  in  said  County,  died  testate,  and  being  at  the  time 
of  his  death  a  legal  resident  of  said  County,  by  means  where- 

24 


of  the  proving  and  allowing  of  his  Last  Will  and  Testament, 
and  granting  Administration  of  all  and  singular,  the  goods, 
chattels,  rights,  credits  and  estate  whereof  he  died  possessed, 
and  also  auditing,  allowing  and  finally  discharging  the  account 
thereof,  was  and  is  within  the  jurisdiction  of  our  county  court 
of  said  county;  and, 

Whereas  the  Last  Will  and  Testament  of  the  said  Charles 
Durkee,  deceased,  was  approved,  allowed  and  admitted  to 
probate  in  said  county  court,  and  said  estate  duly  adminis- 
tered therein,  and  the  accounts  of  the  executors  thereof  were 
allowed  and  they  were  discharged  from  their  trust,  and  the 
sole  surviving  executor  is  not  now  a  resident  of  this  State,  and 
it  appears  that  certain  assets  of  said  deceased  never  came  into 
the  hands  of  the  executors  of  his  Will,  and  have  never  been 
administered  upon,  and  Henry  J.  Hastings  being  duly  ap- 
pointed as  Administrator  dc  bonus  non  cum  testamento  an- 
ne.vo  has  given  bond  as  such  Administrator  as  required  by 
law,  which  has  been  approved  and  filed  in  said"  court ; 

/;/  testimony  whereof,  we  have  caused  the  seal  of  our  said 
County  Court  to  be  hereunto  affixed. 

WITNESS  the  Hon.  George  W.  Taylor,  Judge  of  said 
Court,  at  the  City  of  Kenosha,  in  said  County,  this  19th  day 
of  December,  A.  D.  1911. 

[SEAL.]  GEORGE  W.  TAYLOR, 

County  Judge. 

KENOSHA  COUNTY  COURT— IN  PROBATE. 

IN  THE  MATTER  OF  THIS   LAST   ^i 
WILL     AND     TESTAMENT     OF    ^PETITION. 
CHARLES  DURKEE,  DECEASED.  J 

The  petition  of  Henry  J.  Hastings,  of  said  County,  respect- 
fully represents  that  he  is  the  Administrator  de  bonis  non 

25 


cum  testamento  annexo  of  the  estate  of  Charles  Durkee,  de- 
ceased, duly  qualified  and  acting  as  such;  that  he  knows  of 
no  assets  belonging  to  said  estate  except  fro.n  information  de- 
rived from  J.  J.  Souder,  whose  affidavit  is  presented  here- 
with; that  without  the  assistance  of  Mr.  Souder  he  would  be 
utterly  unable  to  discover  any  assets  belonging  to  said  estate. 
At  a  regular  term  of  said  County  Court  for  Kenosha  Coun- 
ty, State  of  Wisconsin,  held  at  the  Court  House  on  the  2:?rd 
day  of  December,  A.  D.  1911,  during  said  term.. 

In  part  of  the  court's  order  orders  and  directs  the  employ- 
ment of  the  said  Jacob  J.  Souder  to  secure  the  employment 
of  such  special  agents,  the  settlement  of  such  claims,  and  the 
discovery  of  such  assets,  in  negotiating  settlements,  and  se- 
curing services  of  special  agents  and  counsel,  it  being  under- 
stood that  said  Jacob  J.  Souder  and  any  persons  employed  by 
him  shall  have  no  power  to  incur  any  expense  which  shall  be 
a  charge  against  said  Administrator  or  against  said  estate, 
other  than  such  contingent  fees. 
By  the  Court. 

GEORGE  W.  TAYLOR. 

County  Judge. 

On  December  23,  1911,  Henry  J.  Hastings  entered  into 
contract  with  said  Jacob  J.  Souder  employing  him  as  his  agent 
for  the  purpose  aforesaid. 

HENRY   J.    HASTINGS, 

Administrator. 
JACOB  J.  £>OUDER, 

His  Agent. 


CHAPTER  3 


ACT  OF  JULY  12,  1862. 

AX  ACT  to  amend  an  act  entitled  '-An  Act  to  aid  in  the  construction  of  a  railroad 
and  telegraph  line  from  the  Missouri  River  to  the  Pacific  Ocean,  and  to  secure 
to  the  Government  the  use  of  the  same  for  postal,  military,  and  other  purposes  " 
approved  July  1,  1862. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives 
of  the  United  States  of  America  in  Congress  assembled.  That 
the  first  meeting  of  the  commissioners  named  in  the  act  en- 
titled "An  Act  to  aid  in  the  construction  of  a  railroad  and  tel- 
egraph line  from  the  Missouri  River  to  the  Pacific  Ocean,  and 
to  secure  to  the  Government  the  use  of  same  for  postal,  mili- 
tary, and  othei  purposes,"  approved  July  second,  eighteen 
hundred  and  sixty-two,  and  of  the  five  commissioners  directed 
by  said  act  to  be  appointed  by  the  Secretary  of  the  Interior, 
shall  be  held  at  Bryan  Hall,  in  the  CITY  OF  CHICAGO,  IN 
THE  STATE  OF  ILLINOIS,  ON  THE  FIRST  TUES- 
DAY OF  SEPTEMBER  NEXT,  AT  TWELVE  O'CLOCK 
AT  NOON.  A  notice  of  said  meeting,  to  be  signed  by  at  least 
ten  of  the  commissioners  named  in  said  act,  shall  be  published 
at  least  once  a  week  during  the  next  six  successive  weeks  com- 
mencing on  the  twentieth  of  July,  one  thousand  eight  hundred 
and  sixty-two,  in  one  daily  newspaper  m  each  of  the  cities  of 
Boston,  New  York,  Philadelphia,  Cincinnati,  Chicago,  and  St. 
Louis,  and  no  other  notice  of  said  meeting  shall  be  requisite. 

Approved  July  12,  1862. 

This  meeting  was  held  on  the  day  prescribed  by  this  act  and 
the  effort  made  to  secure  money  by  cash  and  subscription  at 

27 


that  time  resulted  in  securing  the  pitiful  sum  of  $2,200,  all 
told,  hardly  enough  to  defray  all  the  expenses  of  the  meeting. 

ACT  OF  MARCH  3,  1865,  AND  AMENDMENT  TO  ACT 
OF  JULY  2 


AX  ACT  ti>  amend  an  act  entitled  "An  act  to  aid  in  the  construction  of  a  railroad 
and  telegraph  line  from  the  Missouri  River  to  the  Pacific  Ocean,  and  to  secure 
to  the  Government  the  use  of  the  same  for  postal,  military,  and  other  purposes," 
approved  July  1,  1862,  and  to  amend  an  act  amendatory  thereof,  approved  July 
second,  eighteen  hundred  and  sixty-four. 

Be  it  enacted  by  the  Senate  and  House  of  Rcpresoitath'cs 
of  the  United  States  of  America  in  Congress  assembled,  That 
section  ten  of  said  act  of  July  second,  eighteen  hundred  and 
sixty-  four,  be  so  modified  and  amended  as  to  allow  the  Cen- 
tral Pacific  Railroad  Company,  and  the  Western  Pacific  Rail- 
road Company  of  California,  the  Union  Pacific  Railroad,  the 
Union  Pacific  Railroad  Company,  eastern  division,  and  all 
other  companies  provided  for  in  said  acts  of  the  second  of 
July,  'eighteen  hundred  and  sixty-four,  to  issue  their  six  per 
centum  thirty  years'  bonds,  interest  payable  in  any  lawful 
money  of  the  United  States,  upon  their  separate  roads.  And 
the  said  companies  are  hereby  authorized  to  issue,  respective- 
ly, their  bonds  to  the  extent  of  one  hundred  miles  in  advance 
of  a  continuous  completed  line  of  construction. 

SEC.  2.  And  be  it  further  enacted,  That  the  assignment 
made  by  the  Central  Pacific  Railroad  Company  of  California 
to  the  Western  Pacific  Railroad  Company  of  said  State,  of  the 
right  to  construct  all  that  portion  of  said  railroad  and  tele- 
graph from  the  city  of  San  Jose  to  the  city  of  Sacramento,  is 
hereby  ratified  and  confirmed  to  the  said  Western  Pacific  Rail- 
road Company,  with  all  the  privileges  and  benefits  of  the  sev- 
eral acts  of  Congress  relating  thereto  and  subject  to  all  the 
conditions  thereof  :  Provided,  That  the  time  within  which  the 
said  Western  Pacific  Railroad  Company  shall  be  required  to 

28  ' 


construct  the  first  twenty  miles  of  their  said  road,  shall  be  one 
year  from  the  first  day  of  July,  eighteen  hundred  sixty-five, 
and  that  the  entire  road  shall  be  completed  from  San  Jose  to 
Sacramento,  connecting  at  the  latter  point  with  the  said  Cen- 
tral Pacific  Railroad,  within  four  years  thereafter. 
Approved  March  3,  18(io. 

New  York,  October  7,  18(i--l. 

\Viiereas  H.  M.  HOX1E,  Esq.,  of  the  State  of  Iowa,  has  a 
certain  contract,  bearing  date  the  eighth  day  of  August,  1804, 
for  the  construction  of  a  portion  of  the  road  of  the  Union 
Pacific  Railroad  Company,  which  contract  the  said  Hoxie  has 
agreed  to  assign  to  Thomas  C.  Durant,  Esq.,  of  the  city  of 
Xc\v  York,  or  to  such  party  or  parties  as  he  may  designate  by 
agreement,  bearing  date  the  thirtieth  day  of  September,  1S(M, 
the  terirs  of  which  assignment  form  a  part  of  this  agreement: 
Xow,  therefore,  we.  the  undersigned,  hereby  agree  to  take  an 
interest  in  the  said  contract  to  the  extent  set  opposite  our  re- 
spective names,  depositing  at  the  same  time,  in  the  hands  of 
said  Thomas  C.  Durant,  twenty-five  per  centum  in  cash  on  the 
interest  so  subscribed.  And  the  parties  hereto  agree  one  with 
the  other,  that  should  default  be  made  in  payment  of  the  bal- 
ance of  the  interest  so  subscribed  as  required,  the  party  so  de- 
faulting shall  not  be  entitled  to  any  further  interest  in  said 
contract  than  the  amount  paid  bears  to  the  amount  subscribed. 
It  is  understood  that  the  arount  subscribed  for  the  carrying 
out  this  contract  shall  be  one  million  six  hundred  thousand 
dollars. 

Thomas  C.  Durant,  six  hundred  thousand  dollars ;  C.  S. 
I'ushnell,  four  hundred  thousand  dollars;  H.  S.  McComb,  one 
hundred  thousand  dollars;  H.  W.  Gray,  two  hundred  thousand 
dollars,  etc.,  etc., 


c. 

Know  all  men  by  these  presents,  that  I,  Herbert  M.  Hoxie, 
for  and  in  consideration  of  one  dollar,  to  me  in  hand  paid,  the 
receipt  whereof  is  hereby  acknowledged,  and  for  divers  other 
good  and  valuable  considerations  me  thereunto  moving,  do 
hereby  sell,  assign,  transfer,  and  make  over  unto  John  Duff, 
trustee,  all  and  singular,  the  agreements  between  the  Union 
Pacific  Railroad  Company  and  myself,  made  by  and  contained 
in  a  certain  proposition  in  writing,  signed  by  me  and  dated 
August  8,  3864,  and  an  acceptance  thereof  by  said  company, 
under  its  seal,  dated  September  23,  1864,  both  which  propo- 
sition and  acceptance  are  hereto  annexed ;  and  also  all  my 
rights  under  said  agreement,  and  all  moneys,  property,  privi- 
leges, payments,  benefits,  and  advantages  to  me  or  to  my  heirs, 
representatives,  or  assigns  by  said  agreement  provided  for  or 
secured,  with  full  power  to  use  my  name  whenever  necessary 
or  proper  for  obtaining,  receiving,  or  enforcing  the  said  rights, 
moneys,  property,  privileges,  payments,  benefits,  and  advant- 
ages as  fully  as  I  myself  could  do  the  same;  subject,  neverthe- 
less, to  my  agreement  with  the  Credit  Mobilier  of  America, 
dated  the  loth  of  March,  1865,  and  all  my  rights  thereunder. 

In  witness  whereof  I  have  hereunto  set  my  hand  and  seal 
this  fifteenth  day  of  March,  one  thousand  eight  hundred  and 
sixty-five. 

HERBERT  M.  HOXIE.     (L.  S.) 

(United  States  internal-revenue  stamp,  $1,  canceled.) 

N.  B.— 1,  24.  " March"  written  on  erasure  before  execution. 
Witness : 

BENJAMIN  F.  BUNKER. 

Whereas,  Herbert  M.  Hoxie  and  the  Union  Pacific  Kail- 
road  Company  have  entered  into  an  agreement  by  means  of 

30 


the  foregoing  writings  (namely,  a  proposition  from  said  Hoxie 
dated  August  8,  1864,  and  an  acceptance  thereof,  dated  Sep- 
tember 23,  1864)  : 

Now  these  presents  witness  that  the  Credit  Mobilier  of 
America,  in  consideration  of  one  dollar,  to  them  in  hand  paid, 
the  receipt  whereof  is  hereby  acknowledged,  and  for  divers 
other  good  and  valuable  considerations  them  thereunto  mov- 
ing, do  hereby  covenant  and  agree  to  guarantee,  and  hereby  do 
guarantee,  to  and  with  the  said  Union  Pacific  Railroad  Com- 
pany, that  the  said  Herbert  M.  Hoxie,  or  his  representatives 
or  assigns,  shall  and  will,  well,  truly,  and  perfectly  perform 
and  fulfill  the  said  agreement  in  all  things  on  his  part  to  be 
done  or  performed,  according  to  the  terms  and  true  intent  of 
said  agreement,  as  in  said  foregoing  writings  contained. 

In  witness  whereof,  the  said  Credit  Mobilier  of  America 
have  caused  these  presents  to  be  sealed  with  their  corporate 
seal  and  signed  by  their  presidents,  this  fifteenth  day  of  March, 
one  thousand  eight  hundred  and  sixty-five,  at  their  agency  in 
the  city  of  New  York. 

THOMAS  C.  DURANT, 

President. 

Attest : 

B.  F.  BUNKER, 

Assistant  Secretary. 

Memorandum  of  an  agreement  made  the  15th  day  of  March, 
1805,  between  the  Credit  Mobilier  of  America,  a  corporation 
organized  under  the  laws  of  the  State  of  Pennsylvania,  of  one 
part,  and  Herbert  M.  Hoxie,  of  the  other  part. 

Whereas,  by  certain  writings  hereto  annexed,  and  forming 
part  of  these  presents,  a  contract  has  been  made  by  and  be 
tween  the  Union  Pacific  Railroad  Company  and  said  Hoxie; 

31 


And  whereas  said  Hoxie  has  partly  performed  the  same : 

Now,  in  consideration  of  the  premises,  and  of  the  mutual 
grants  and  agreements  herein  contained,  the  parties  to  these 
presents  grant  and  agree  as  follows : 

Said  Credit  Mobilier  agrees  to  execute  to  said  company  a 
guarantee  of  the  performance  of  said  contract  by  said  Hoxie, 
and  also  to  make  to  said  Hoxie  all  advances  of  money  which 
may  be  necessary  to  provide  and  pay  for  labor,  materials,  sen  - 
ices,  and  all  other  expenses  and  charges  in  the  construction  of 
the  railroad,  'and  other  performance  of  said  contract  on  said 
Hoxie's  part;  and  also  to  provide  for,  secure,  and  obtain  all 
subscriptions  to  capital  stock  required  by  said  contract  fron 
said  Hoxie.  Said  Hoxie  agrees  to,  and  hereby  does,  assign  to 
said  Credit  Mobilier  all  his  right  to  have  and  receive  from  said 
company  securities,  stocks,  moneys,  profits,  and  payments  due 
or  to  become  due  for  constructing  the  railroad,  or  other  per- 
formance of  said  contract,  upon  said  Hoxie's  being  paid  for 
all  work  done  and  materials  furnished,  as  by  adjustment  cer- 
tificates of  the  engineer  or  settlement  made  in  December  last ; 
and  he  hereby  appoints  said  Credit  Mobilier  his  lawful  at- 
torney irrevocable,  to  take,  collect,  and  receive  for  their  use 
all  the  matters  and  things  so  assigned. 

And  for  the  better  securing  said  Credit  Mobilier  against 
being  made  chargeable  on  said  guarantee  by  any  default  of 
said  Hoxie,  and  against  any  loss  of  the  n -utters  and  things 
above  assigned,  said  Hoxie  hereby  appoint:  said  Credit  Mo- 
bilier his  lawful  attorney,  irrevocable,  to  name  constitute,  em- 
ploy, and  at  their  pleasure  remove  all  agents  and  subagents 
which  said  Credit  Mobilier  may  deem  necessary  or  proper  to 
conduct,  manage,  and  do  the  business  of  constructing  the  rail- 
road, otherwise  performing  said  contract,  and  to  pay  out  and 
apply  the  moneys  so  to  be  advanced  to  the  uses  for  which  the 


same  are  to  be  advanced,  and  does  hereby  pledge  and  transfer 
to  said  Credit  Mobilier  the  said  contract  and  all  his  rights  un- 
der the  same  as  collateral  security  for  the  performance  of  said 
contract  on  his  part,  with  full  power  to  enforce  such  pledge  on 
default  without  notice. 

The  said  Credit  Mobilier  agrees  to  save  said  Hoxie  harmless 
and  indemnified  against  all  claims  under  said  contract,  and  to 
pay  the  said  Hoxie  five  thousand  dollars  in  cash  and  ten  thou- 
sand dollars  in  the  stock  of  the  Union  Pacific  Railroad  Com- 
pany, and  to  carry  out  the  conditions  relating  to  a  construction 
bureau,  as  shown  by  specifications  hereto  annexed. 

In  witness  whereof  said  Credit  Mobilier  has  executed  this 
memorandum  under  its  seal  and  signature  of  its  president,  and 
said  Hoxie  has  signed  and  sealed  the  same,  the  day  and  year 
first  above  written,  at  their  agency  in  the  city  of  New  York. 

T.  C.  DURA  NT,  President. 
H.  M.  HOXIE. 

Witness : 

B.  F.  BUNKER. 


CREDIT  MOBILIER  AND  UNION  PACIFIC 
RAILROAD. 


H.  M.  HOXIE,  Esq. : 

Dear  Sir:  You  will  please  go  on  with  the  work  under  the 
above  proposition,  and  if  the  company  do  not  accept  it  before 
the  first  day  of  October  next,  they  will  pay-  you  upon  the  same 
terms  and  conditions  for  what  work  may  be  done,  as  shown 
by  the  estimates  of  the  engineers,  made  as  providecl  in  this 


proposition,  first  giving  you  thirty  days'  notice  that  they  do 
not  accept. 

GEORGE  T.  M.  DAVIS, 

Special  Committee. 

Above  contract  is  approved  and  ratified. 

[SEAL.]  JOHN  A.  Dix. 

C.    S.    BUSHNELL. 

GEORGE  T.  M.  DAVIS. 
September  23,  186.4. 

To  the  President  and  Executive  Committee  of  the  Union  Pa- 
cific Railroad  Company: 

On  condition  that  your  railroad  company  will  extend  my 
contract  from  its  present  length  for  one  hundred  miles,  so  as 
to  embrace  all  that  portion  of  the  road  between  Omaha  and 
the  one  hundredth  meridian  of  longitude,  I  will  subscribe,  or 
cause  to  be  subscribed,  for  five  hundred  thousand  dollars  of 
the  stock  of  your  company. 

Respectfully  yours, 

H.   M.    HOXIE, 
By  H.  C.  CRANE, 

Attorney. 

-The  above  proposition  is  hereby  accepted  for  and  on  behalf 
of  the  Union  Pacific  Railroad  Company. 

JOHN  A.  Dix, 
C.  S.  BUSHNELL, 
GEO.  T.  M.  DAVIS, 
Special  Committee. 

October  3,  1864. 

34 


PACIFIC  RAILROAD  ACTS  OF  JULY  2,  1863. 


AX  ACT  to  aid  in  the  construction  of  a  railroad  and  telegraph  line  from  the  Mis- 
souri River  to  the  Pacific  Ocean,  and  to  secure  to  the  Government  the  use  of 
the  same  for  postal,  military,  and  other  purposes. 


SEC.  5.  And  be  it  further  enacted,  That  for  the  purposes  herein  men- 
tioned the  Secretary  of  the  Treasury  shall,  upon  the  certificate  in 
writing  of  said  commissioners  of  the  completion  and  equipment  of 
forty  consecutive  miles,  of  said  railroad  and  telegraph,  in  accordance 
with  the  provisions  of  this  act,  issue  to  said  company  bonds  of  the 
United  States  of  one  thousand  dollars  each,  payable  in  thirty  years 
after  date,  bearing  six  per  centum  per  annum  interest  (said  interest 
payable  semi-annually),  which  interest  may  be  paid  in  United  States 
treasury  notes  or  any  other  money  or  currency  which  the  United  States 
have  or  shall  declare  lawful  money  and  a  legal  tender,  to  the  amount 
of  sixteen  of  said  bonds  per  mile  for  such  section  of  forty  miles;  and 
to  secure  the  repayment  to  the  United  States  as  hereinafter  provided, 
of  the  amount  of  said  bonds  so  issued  and  delivered  to  said  company, 
together,  with  all  interest  thereon  which  shall  have  been  paid  by  the 
United  States,  the  issue  of  said  bonds  and  delivery  to  the  company 
sliall  ipso  facto  constitute  a  first  mortgage  on  the  whole  line  of  the 
railroad  and  telegraph,  together  with  the  rolling  stock,  fixtures  and 
property  of  every  kind  and  description,  and  in  consideration  of  which 
said,  bonds  may  be  issued  ;  and  on  the  refusal  or  failure  of  said  com- 
pany to  redeem  said  bonds,  or  any  part  of  them,  when  required  so  to 
do  by  the  Secretary  of  the  Treasury,  in  accordance  with  the  provisions 
of  this  act.  the  said  road,  with  all  the  rights,  functions,  immunities 
and  appurtenances  thereunto  belonging,  and  also  all  lands  granted  to 
the  said  company  by  the  United  States  which,  at  the  time  of  said 
default,  shall  remain  in  the  ownership  of  the  said  company,  may  be 
tal-a-n  possession  of  by  the  Secretary  of  the  Treasury,  for  the  use  and 
liriv.-fit  of  the  United  States:  Provided,  This  section  shall  not  apply  to 
thai  ]>urt  of  any  road  now  constructed, 


AND  SECTIONS  10  AND  11  OF  THE  AMENDED  ACT 
OF  JULY  2,  1864. 

SEC.  10.  And  he  it  further  enacted,  That  section  five  of  said  act  be  so 
modified  and  amended  that  the  Union  Pacific  Railroad  Company,  the 
Central  Pacific  Railroad  Company,  and  any  other  company  authorized 
to  participate  in  the  construction  of  said  road,  may,  on  the  completion 
of  each  section  of  said  road,  as  provided  in  this  act  and  the  act  to  which 
this  act  is  an  amendment,  issue  their  first-mortgage  bonds  on  their 
respective  railroad  and  telegraph  lines  to  an  amount  not  exceeding  the 
amount  of  the  bonds  of  the  United  States,  and  of  even  tenor  and  date, 
time  of  maturity,  rate  and  character  of  interest  with  the  bonds  autho- 
rized to  be  issued  to  said  railroad  companies  respectively.  And  the  lien 
of  the  United  States  bonds  shall  be  subordinate  to  that  of  the  bonds  of 
any  or  either  of  said  companies  hereby  authorized  to  be  issued  on  their 
respective  roads,  property,  and  equipments,  except  as  to  the  provisions 
of  the  sixth  section  of  the  act  to  which  this  act  is  an  amendment,  relat- 
ing to  the  transmission  of  dispatches  and  the  transportation  of  mail 
troops,  munitions  of  war,  supplies,  and  public  stores  for  the  Govern- 
ment of  the  United  States.  And  said  section  is  further  amended  by 
striking  out  the  word  "forty"  and  inserting  in  lieu  thereof  the  word  "on 
each  and  every  section  of  not  less  than  twenty." 

SEC.  11.  And  be  it  further  enacted,  That  if  any  of  the  railroad  com- 
panies entitled  to  bonds  of  the  United  States,  or  to  issue  their  first- 
mortgage  bonds  herein  provided  for  has,  at  the  time  of  the  approval  of 
this  act,  issued,  or  shall  thereafter  issue,  any  of  its  own  bonds  or  secu- 
rities in  such  form  or  manner  as  in  law  or  equity  to  entitle  the  same 
to  priority  or  preference  of  payment  to  the  said  guaranteed  bonds,  or 
said -first-mortgaged  bonds,  the  amount  of  such  corporate  bonds,  out- 
standing and  unsatisfied,  or  uncanceled,  shall  be  deducted  from  the 
amount  of  such  government  and  first-mortgaged  bends  which  the  com- 
pany may  be  entitled  to  receive  and  issue;  and  such  an  amount  only  of 
such  government  bonds  and  such  first-mortgaged  bonds  shall  be  granted 
or  permitted,  as  added  to  such  outstanding,  unsatisfied,  or  uncan- 
celed bonds  of  the  company  shall  make  up  the  whole  amount  per  mile 
to  which  the  company  would  otherwise  have  been  entitled:  And  pro- 
vided, further.  That  before  any  bonds  shall  be  so  'given  by  the  United 
States,  the  company  claiming  them  shall  present  to  the  Secretary  of  the 
Treasury  an  affidavit  of  the  president  and  secretary  of  the  company,  to 
be  sworn  to  before  the  judge  of  a  court  of  record  setting  forth  whether 

36 


said  company  has  issued  any  such  bonds  or  securities,  and  if  so,  par- 
ticularly describing  the  same,  and  such  other  evidence  as  the  secretary 
may  require,  so  as  to  enable  him  to  make  the  deduction  herein  required ; 
and  such  affidavit  shall  then  be  filed  and  deposited  in  the  office  of  the 
Secretary  of  the  Interior.  And  any  person  swearing  falsely  to  any  such 
affidavit,  shall  be  deemed  guilty  of  perjury,  and  on  conviction  thereof, 
shall  be  punished  as  aforesaid :  Provided  also,  That  no  land  granted  by 
this  act  shall  be  conveyed  to  any  party  or  parties,  and  no  bonds  shall 
be  issued  to  any  company  or  companies,  party  or  parties,  on  account  of 
any  road  or  part  thereof,  made  prior  to  the  passage  of  the  act  to  which 
this  act  is  an  amendment,  or  made  subsequent  thereunto  under  the  pro- 
visions of  any  act  or  acts  other  than  this  act,  and  the  act  amended  by 
this  act. 


NOTE. — On  these  three  sections  5  of  the  act  of  1862  and 
sections  10  and  11  of  the  amended  act  of  1864,  the  adminis- 
tration relied  for  the  protection  of  the  Government. 

The  railroads  having  been  charged  with  the  violation  of 
these  three  sections,  after  repeated  requests  for  the  compli- 
ance, which  they  refused. 

In  1867  the  President,  for  the  protection  of  the  Government, 
issued  an  order  for  the  Secretary  of  the  Treasury  to  withhold 
all  the  subsidy  bonds  the  companies  were  entitled  to  or  may 
be  hereafter  become  entitled,  and  the  Secretary  of  the  Interior 
was  instructed  to  withhold  the  issue  of  any  land  grant  patents 
until  the  Pacific  Railroads  Companies  deposit  all  there  first 
mortgage  paramount  lien  bonds  with  the  Secretary  of  the 
Treasury,  and  the  President  notified  the  railroad  companies  of 
his  action. 


ACT  OF  JULY  25,  1868. 

AX  ACT  relative  to  filing  reports  of  railroad  companies. 
Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the 

37 


Cnited  States  of  America  in  Congress  assembled,  That  the  reports 
required  to  be  made  to  the  Secretary  of  the  Treasury  on  or  before  the 
first  day  of  July  of  each  year  by  the  corporations  created  by  or  entitled 
to  subsidies  under  the  provisions  of  an  act  entitled  "An  act  to  aid  in 
the  construction  of  a  railroad  and  telegraph  line  from  the  Missouri 
River  to  the  Pacific  Ocean,  and  to  secure  to  the  Government  the  use 
of  the  same  for  postal,  military,  and  other  purposes,"  approved  July 
first,  eighteen  hundred  and  sixty-two,  and  the  acts  supplemental  to  and 
amendatory  thereof,  shall  hereafter  be  made  to  the  Secretary  of  the 
Interior,  on  or  before  the  first  day  of  October  of  each  year.  Said 
reports  shall  furnish  full  and  specific  information  upon  the  several 
points  mentioned  in  the  twentieth  section  of  said  act  of  eighteen  hun- 
dred and  sixty-two,  and  shall  be  verified  as  therein  prescribed,  and  on 
failure  to  make  the  same  as  herein  required,  the  issue  of  bonds  or 
patents  to  the  company  in  default  shall  be  suspended  until  the  require- 
ments of  this  act  shall  be  complied  with  by  such  company.  And  the 
reports  hitherto  made  to  the  Secretary  of  the  Treasury  under  the  said 
act  of  July  first,  eighteen  hundred  and  sixty-two,  shall  be  transferred 
and  delivered  by  him  to  the  Secretary  of  the  Interior  to  be  filed  by  him. 

SEC.  3,  And  be  it  further  enacted,  That  the  reports  required  from  the 
commissioners  appointed  to  examine  and  report  in  relation  to  the  road 
of  any  of  the  corporations  whereto  reference  is  made  in  this  act,  shall 
be  addressed  to  and  filed  in  the  Department  of  the  Interior;  and  all 
such  reports  heretofore  made  shall  be  transferred  to  and  filed  in  said 
Department  of  the  Interior;  and  so  much  of  any  and  all  acts  as 
requires  any  reports  from  such  companies,  or  any  officers  thereof,  to 
be  made  to  the  Secretary  of  the  Treasury,  is  hereby  repealed. 

SEC.  4.  And  be  it  further  enacted,  That,  in  addition  to  the  eight  sub- 
jects referred  to  in  section  twenty  of  the  act  of  July,  eighteen  hundred 
and  sixty-two,  to  be  reported  upon,  there  shall  also  be  furnished  an- 
nually to  the  Secretary  of  the  Interior  all  reports  of  engineers,  super- 
intendents, or  other  officers  who  make  annual  reports  to  any  of  said 
railroad  companies. 

Approved,  June  25,  1868. 

To  the  Honorable  the  Judges  of  the  Circuit  Court  of  the 
United  States  within  and  for  the  Eighth  Judicial  Circuit 
and  District  of  Nebraska: 

38 


Richard  Olney,  Attorney  General  of  the  United  States  of 
America,  in  behalf  of  the  United  States,  by  leave  of  said  court, 
presents  this  his  petition  in  the  above-entitled  cause,  and  by 
way  of  such  petition  avers  and  says: 

That  under  and  in  pursuance  of  the  provisions  of  the  act 
of  the  Congress,  approved  July  1,  1862,  entitled  "An  act  to 
aid  in  the  construction  of  a  railroad  and  telegraph  line  from 
the  Missouri  River  to  the  Pacific  Ocean,  and  to  secure  to  the 
Government  the  use  of  the  same  for  postal,  military,  and  other 
purposes,"  and  the  acts  amendatory  thereof,  the  Secretary  of 
the  Treasury  was  authorized  to  and  did  issue  subsidy  bonds  of 
the  United  States  to  the  Union  Pacific  Railroad  Company  in 
the  total  sum  of  $27,236,512,  and  to  the  Kansas  Pacific  Rail- 
way Company  in  the  total  sum  of  $6,303,000,  together  making 
bonds  for  the  following  total  sums  issued  at  the  following 
dates,  exclusive  of  interest: 

November  1,  1865    $640,000 

January  1,  1886   ! 1,440,000 

February  1,  1886   4,320,000 

January  1,  1867   6,640,000 

"January  1,  1868 17,342,512 

*  January  1,  1869   3,157,000 

Total $33,529,512 

and  to  secure  the  repayment  to  the  United  States  of  the 
amount  of  said  bonds,  with  interest  thereon,  at  the  rate  of  G 
per  cent  per  annum  from  said  dates  respectively,  until  the  date 
of  their  respective  maturities,  it  was  provided  by  the  fifth  sec- 
tion of  said  act  that  the  "issue  of  said  bonds  and  delivery  to 
the  company  shall,  ipso  facto,  constitute  a  first  mortgage  on 
the  whole  line  of  the  railroad  and  telegraph,  together  with  the 
rolling  stock,  fixtures,  and  property  of  every  kind  and  descrip- 

39 


tion,  and  in  consideration  of  which  said  bonds  may  be  issued." 
That  the  said  Attorney  General  for  the  United  States  is  in- 
formed and  believes  that  first  mortgage  bonds  have  been  is- 
sued and  are  outstanding  to  which  said  lien  of  the  United 
States  has  been  and  is,  under  the  authority  of  said  act,  ap- 
proved July  2,  1864,  subordinated  to  the  principal  sums  of 
$27,229,000  only  upon  the  line  of  the  Union  Pacific  Railroad 
from  Omaha  to  Ogden,  and  to  the  principal  sums  of  $2,240,- 
000  and  $4,063,000,  or  a  total  of  $6,303,000  upon  the  394  miles 
of  the  Kansas  Pacific  Railway,  lying  next  east  of  its  eastern 
terminus,  and  that  upon  that  part  of  the  Kansas  Pacific  Rail- 
way, which  is  situated  between  the  said  394th  mile  post  and 
Denver,  there  is  a  first  mortgage  debt  which  will  mature  in 
1899  to  the  amount  of  $5,887,000  and  that  the  interest  on  said 
first  mortgage  debts  has  been  paid  by  said  companies. 

That  by  the  act  of  Congress  approved  May  7,  1878,  entitled 
"An  act  to  alter  and  amend  the  act  entitled  'An  act  to  aid  in 
the  construction  of  a  railroad  and  telegraph  line  from  the 
Missouri  River  to  the  Pacific  Ocean,  and  to  secure  to  the  Gov- 
ernment the  use  of  the  same  for  postal,  military,  and  other 
purposes'  approved  July  1,  1862,  and  also  to  alter  and  amend 
the  act  of  Congress,  approved  July  2,  1864,  in  amendment  of 
the  said  first  named  act,"  it  was  provided,  among  other 
things,  that  a  sinking  fund  should  be  created  for  the  further 
security  of  the  payment  and  reimbursement  of  the  said  subsidy 
bonds  issued  by  the  United  States  in  aid  of  said  railroad  com- 
panies, by  the  reservation  in  the  Treasury  of  the  United  States 
of  certain  sums  of  money,  which  sums  so  covered  into  the 
Treasury  amounted  on  June  30,  1893,  to  a  large  amount,  which 
had  before  that  time  been  invested  and  were  then  and  are  now 
held  as  follows : 


40 


UNION  PACIFIC  RAILWAY  COMPANY  SINKING 
FUND,  JUNE  30,  1893. 

United  States  currency  6s $188,000.00 

Union  Pacific  R.  R.  Co.  first  mortgage  6s 5,739,000.00 

Kansas  Pacific  R.  R.  Co.  first  mortgage  6s 1,276,000.00 

Central   Branch   Union   Pacific  R.   R.   Co.   first 

mortgage   6s 936,000.00 

Central  Pacific  R.  R.  Co.  first  mortgage  6s.  ....  3,304,000.00 

Western  Pacific  R.  R.  Co.  first  mortgage  6s 335,000.00 

Sioux  City  &  Pacific  R.  R.  Co.  first  mortgage  6s.  712,500.00 


Total  securities 12,490,500.00 

Cash  uninvested   9,018.61 


Total  fund. 12,499,518.61 

That  by  the  terms  of  the  seventh  section  of  the  act  last  here- 
inbefore described  it  was  provided  that  said  sinking  fund 
should,  at  the  maturity  of  the  bonds,  issued  by  the  United 
States,  "be  applied  to  the  payment  and  satisfaction  thereof, 
according  to  the  interest  and  proportion  of  each  of  said  com- 
panies in  said  fund,  and  of  all  interest  paid  by  the  United 
States  thereon  and  not  reimbursed,  subject  to  the  provisions 
of  the  next  section." 

And,  by  the  eighth  section  of  the  said  act,  it  was  further 
provided  that  ''said  sinking  fund  so  established  and  accumu- 
lated shall,  according  to  the  interest  and  proportion  of  said 
companies  respectively  therein,  be  held  for  the  protection,  se- 
curity, and  benefit  of  the  lawful  and  just  holders  of  any  mort- 
gage or  lien  debts  of  such  companies  respectively,  lawfully 
paramount  to  the  rights  of  the  United  States,  and  for  the 

41 


claims  of  other  creditors,  if  any,  lawfully  chargeable  upon  the 
funds  so  required  to  be  paid  into  said  sinking  fund,  accord- 
ing to  their  respective  lawful  priorities,  .as  well  as  for  the 
United  States,  according  to  the  principles  of  equity,  to  the  end 
that  all  persons  having  any  claim  upon  said  sinking  fund  may 
be  entitled  thereto  in  due  order." 

And  the  said  Attorney  General  for  the  United  States  of 
America  gives  the  court  here  to  understand  and  be  informed 
that  the  nature  and  extent  of  the  claims  and  liens  asserted  or 
which  may  be  asserted  against  and  upon  the  property  of  the 
Union  Pacific  Railroad  Company,  the  Kansas  Pacific  Railway 
Company,  and  the  Denver  Pacific  Railway  and  Telegraph 
Company,  and  since  their  consolidation  aforesaid,  against  and 
upon  the  property  of  the  said  Union  Pacific  Railway  Com- 
pany, and  its  several  branches  and  leased  and  connecting  lines, 
and  upon  the  property  and  securities  of  the  railroad  com- 
panies, named  in  the  bill  of  complaint  in  this  cause,  are  so 
extensive  and  complex,  existing  in  so  many  States  and  Ter- 
ritories, and  governed  by  such  diverse  laws,  that  without  an 
investigation  requiring  much  delay  and  the  protracted  labor 
of  legal  and  other  experts,  and  perhaps  without  judicial  de- 
cisions, it  will  not  be  possible  for  the  Attorney  General  to 
form,  and  he  can  not  now  express  an  opinion  as  to  the  extent 
and  priority  of  the  liens  described  in  the  said  bill  of  com- 
plaint, or  otherwise  impressed  upon  the  property  of  the  said 
railroad  companies  named  as  defendants  thereto,  but  he  avers 
the  fact  and  law  to  be  that  of  the  debts  accruing  to  the  United 
States  of  America,  on  account  of  their  said  advances  of  sub- 
sidy bonds,  under  the  acts  aforesaid,  the  principal  sums  will 
mature  as  follows: 

On  November   1,    1895 $640,000 

On  January    1,    1896 1,440,000 

42 


On  February  1,  1896   4,320,000 

On  January    1,    1897 '. 6,640,000 

*On  January  1,  1898 17,342,512 

On  January    1,    1899 - 3,157,000 


Total 33,539,512 

That  interest  thereon  will  at  said  dates  be  payable  at  the 
rate  of  180  per  cent  to  the  United  States,  such  interest  being 
the  sum  of  $60,371,121.60,  making  the  total  sum,  of  principal 
and  interest,  the  sum  of  $93,910,633.60,  less  the  sums  which 
may  be  credited  thereon  by  reason  of  said  payments  or  cred- 
its made  under  said  sixth  section  of  the  act  of  July  1,  1862,  or 
otherwise,  and  less  whatever  amount  may  be  realized  for  and 
out  of  the  said  sinking  fund,  as  it  may  exist  and  be  consti- 
tuted at  the  time  of  the  respective  maturities  of  said  debts, 
and  that  said  debts  and  interest;  less  said  credits  and  sinking 
fund  now  amount  at  the  present  value  of  said  sinking  fund, 
to  more  than  $55,000,000  and  are  secured  by  the  first  lien  upon 
all  the  property,  real,  personal,  and  mixed,  choses  in  action, 
assets,  income,  and  franchises  of  the  said  Union  Pacific  Rail- 
way Company,  subject  to  the  said  prior  mortgage  liens  here- 
tobefore  described,  amounting  to  $27,229,000,  $6,303,000,  and 
$5,887,000,  and  subject  also  to  any  paramount  lawful  prior 
right,  title  or  lien  upon  any  property  of  said  company  which 
may  have  been  created  before  and  existed  at  the  time  of  the 
acquisition  of  any  such  property,  by  said  Union  Pacific  Rail- 
road Company,  said  Kansas  Pacific  Railway  Company,  said 
Denver  Pacific  Railway  and  Telegraph  Company,  or  said 
Union  Pacific  Railway  Company,  and  subject  further  to  any 
use  or  disposition  which  may  have  been  made  by  said  Union 
Pacific  Railway  Company  of  any  of  its  property  or  assets  in 

43 


the  ordinary  proper  and  lawful  course  of  its  current  business 
in  good  faith  and  for  valuable  consideration. 


JOINT  RESOLUTION  OF  APRIL  10,   1869. 

JOINT  RESOLUTION  for  the  protection  of  the  interests  of  the  United  States  in 
the  Union  Pacific  Railroad  Company,  the  Central  Pacific  Railroad  Company  and 
for  other  purposes. 

Be  it  resolved  by  the  Senate  and  House  of  Representatives  of  the 
United  States  of  America  in  Congress  assembled,  That  the  stockholders 
of  the  Union  Pacific  Railroad  Company,  at  a  meeting  to  be  held  on 
the  twenty-second  day  of  April,  eighteen  hundred  and  sixty-nine,  at  the 
city  of  Boston  (with  power  to  adjourn  from  day  to  day)  shall  elect 
a  board  of  directors  for  the  ensuing  year;  and  said  stockholders  are 
hereby  authorized  to  establish  their  general  office  at  such  place  in  the 
United  States  are  they  may  select  at  said  meeting :  Provided,  That  the 
passage  of  this  resolution  shall  not  confer  an}'  other  right  upon  said 
Union  Pacific  Railroad  Company  than  to  hold  such  election,  or  be  held 
in  any  manner  to  relinquish  or  waive  any  rights  of  the  United  States  to 
take  advantage  of  any  act  or  neglect  of  said  Union  Pacific  Railroad 
Company  heretofore  done  or  omitted  whereby  the  rights  of  the  General 
Government  have  been  or  may  be  prejudiced:  And  provided,  further, 
That  the  common  terminus  of  the  Union  Pacific  and  the  Central  Pacific 
Railroads  shall  be  at  or  near  Ogden ;  and  the  Union  Pacific  Railroad 
Company  shall  build,  and  the  Central  Pacific  Railroad  Company  pay  for 
and  own  the  railroad  from  the  terminus  aforesaid  to  Promontory  Sum- 
mit, at  which  point  the  rails  shall  meet  and  connect  and  form  one 
continuous  line. 

SEC.  2.  And  be  it  further  resolved,  That,  to  ascertain  the  condition 
of  the  Union  Pacific  Railroad  and  the  Central  Pacific  Railroad,  the 
President  of  the  United  States  is  authorized  to  appoint  a  board  of 
eminent  citizens,  not  exceeding  five  in  number,  and  who  shall  not  be 
interested  in  either  road,  to  examine  and  report  upon  the  condition  of, 
and  what  sum  or  sums,  if  any,  will  be  required  to  complete  each  of  said 
roads,  for  the  entire  length  thereof,  to  the  said  terminus  as  a  first-class 
railroad  in  compliance  with  the  several  acts  relating  to  said  roads;  and 
the  expense  of  such  board,  including  an  allowance  of  ten  dollars  to 

44 


each  for  their  services  for  each  day  employed  in  such  examination  or 
report,  to  be  paid  equally  by  said  companies. 

SEC.  3.  And  be  it  further  resolved.  That  the  President  is  hereby 
authorized  and  required  to  withhold  from  each  of  said  companies  an 
amount  of  subsidy  bonds  authorized  to  be  issued  by  the  United  States 
under  said  acts  sufficient  to  secure  the  full  completion  as  a  first-class 
road  of  all  sections  of  such  road  upon  which  bonds  have  already  been 
issued,  or  in  lieu  of  such  bonds  he  may  receive  as  such  security  an 
equal  amount  of  the  first-mortgage  bonds  of  such  company ;  and  if  it 
shall  appear  to  the  President  that  the  amount  of  subsidy  bonds  yet'  to 
be  issued  to  either  of  said  companies  is  insufficient  to  insure  the  full 
completion  of  such  road,  he  may  make  requisition  upon  such  company 
for  a  sufficient  amount  of  bonds  already  issued  to  said  company,  or  in» 
his  discretion  of  their  first-mortgage  bonds,  to  secure  the  full  comple- 
tion of  the  same.  And  in  default  of  obtaining  such  security  as  (is)  in 
this  section  provided,  the  President  may  authorize  and  direct  the 
Attorney  General  to  institute  such  suits  and  proceedings  on  behalf  and 
in  the  name  of  the  United  States,  in  any  court  of  the  United  States 
having  jurisdicion,  as  shall  lie  necessary  or  proper  to  compel  the  giving 
of  such  security  and  thereby,  or  in  any  manner  otherwise,  to  protect  the 
interests  of  the  Uinted  States  in  said  road,  and  to  insure  the  full  com- 
pletion thereof  as  a  first-class  road,  as  required  by  law  and  the  statutes 
in  that  case  made. 

SEC.  4.  And  be  it  further  resolved.  That  the  attorney  General  of  the 
United  States  be,  and  he  is  hereby,  authorized  and  directed  to  investi- 
gate whether  or  not  the  charter  and  all  the  franchises  of  the  Union 
Pacific  Railroad  Company  and  of  the  Central  Pacific  Railroad  Company 
have  not  been  forfeited,  and  to  institute  all  necessary  and  proper  legal 
proceedings ;  also  to  investigate  whether  or  not  said  companies  have 
or  have  not  made  any  illegal  dividends  upon  their  stock,  and  if  so,  to 
institute  the  necessary  proceedings  to  have  the  same  reimbursed ;  and 
also  to  investigate  whether  any  of  the  directors  or  any  other  agents  or 
employees  have  or  not  violated  any  penal  law,  and  if  so  to  institute  the 
proper  criminal  proceedings  against  all  persons  who  have  violated  such 
laws. 

Approved,  April  10,  1869. 

Treasury  Department,  Feb.  21,  1879. 

Hon.  Samuel  J.  Randall,  Speaker,  House  of  Representatives. 
Sir:  The  third  section  of  the  Act  of  Congress,  approved 

45 


May  7,  1878,  entitled  "An  act  to  alter  and  amend  the  Act  en- 
titled 'An  act  to  aid  in  the  construction  of  a  railroad  and  tele- 
graph line  from  the  Missouri  River  to  the  Pacific  Ocean,  and 
to  secure  to  the  Government  the  use  of  the  same  for  postal, 
military,  and  other  purposes/  approved  July  1,  1862,  and  also 
to  alter  and  amend  the  Act  of  Congress  approved  July  2,  1864, 
in  amendment  of  said  first-named  Act,"  provides  "That  there 
shall  be  established  in  the  Treasury  of  the  United  States  a 
sinking  fund,  which  shall  be  invested  by  the  Secretary  of  the 
Treasury  in  bonds  of  the  United  States,  and  the  semi-annual 
,  income  thereof  shall  be  in  like  manner  from  time  to  time  in- 
vested, and  the  same  shall  accumulate,  and  be  disposed  of  as 
hereinafter  mentioned.  And  in  making  such  investments  the 
Secretary  shall  prefer  the  five  per  centum  bonds  of  the  United 
States,  unless,  for  good  reasons  appearing  to  him,  and  which 
he  shall  report  to  Congress,  he  shall  at  any  time  deem  it  ad- 
visable to  invest  in  other  bonds  of  the  United  States." 

The  only  investment  yet  made  under  the  provisions  of  this 
Act  has  been  made  in  the  five  per  centum  bonds  of  1881,  as 
follows:  On  account  of  sinking  fund,  Union  Pacific  Railroad 
Company,  principal,  $59,500,  and  premium  $3,049.37 ;  and  on 
account  of  sinking  fund,  Central  Pacific  Railway  Company, 
principal  $36,700,  and  premium  $1,880.88. 

It  is  very  probable  that  this  loan  will  be  called  in  and  funded 
into  four  per  cent  bonds  within  one  year  after  it  is  due.  If, 
therefore,  this  loan  is  redeemed  by  May  1,  1882,  this  invest- 
ment would  only  realize  to  the  fund  3  and  32/100  per  cent  per 
annum. 

The  advantage  to  the  fund  of  investments  in  four  per  cent 
bonds  at  par  is  apparent,  unless  the  market  price  of  the  four 
and  one-half  per  cent  bonds  falls  below  105.03 ;  the  five  per 
cent  bonds  below  103. 02,  and  currency  sixes  below  126.44.  I 

40 


have  therefore  to  inform  Congress,  in  accordance  with  the 
requirements  of  the  statute,  that  investments  will  hereafter 
be  made  in  four  or  four  and  one-half  per  cent  bonds  or  cur- 
rency sixes,  as  may  be  most  advantageous  to  the  fund,  having 
regard  to  the  length  of  time  the  investment  is  to  continue. 

As  the  interests  of  the  United  States  and  the  railroad  com- 
panies in  this  fund  are  reciprocal,  I  would  recommend  that  the 
law  be  so  modified  as  to  authorize  the  Secretary  of  the  Treas- 
ury, at  his  discretion,  to  invest  such  amounts  as  may  be  from 
time  to  time  payable  to  this  fund  in  the  first  mortgage  bonds 
of  the  respective  roads,  as  authorized  by  the  tenth  section  of 
the  Act  of  July  2,  1864  (13  Statutes,  358). 

This  will  give  the  roads  a  better  rate  of  interest  on  the  fund 
without  detriment  to  the  United  States. 

The  United  States  as  a  deferred  creditor,  is  interested  to  the 
extent  of  the  preferred  bonds. 

The  ninth  section  of  the  Act  of  May  7,  1878,  provides  that 
all  sums  required  to  be  paid  into  the  sinking  fund  under  this 
act,  or  under  the  acts  hereinbefore  referred  to,  are  made  a  lien 
upon  all  the  property  and  franchises  of  the  roads,  "subject  to 
any  lawfully  prior  and  paramount  mortgage,  lien,  or  claim 
thereon."  As  these  bonds  are  a  prior  lien  on  this  fund,  better 
investment  for  the  fund  itself  can  not  be  obtained,  so  long  as 
they  can  be  purchased  below  the  market  rate  of  the  currency 
sixes. 

Very  respectfully, 

JOHN  SHERMAN, 

Secretary. 

Treasury  Department,  June  U,  1880. 

Hon.  Samuel  J.  Randall,  Speaker,  House  of  Representatives. 
Sir:  Section  3  of  the  Act  of  May  7,  1878  (20  Stat,  58),  es- 

47 


tablishes  in  the  Treasury  of  the  United  States  a  sinking  fund 
for  the  Union  Pacific  and  Central  Pacific  Railroad  Companies 
which  shall  be  invested  by  the  Secretary  of  the  Treasury  in 
bonds  of  the  United  States,  and  requires  such  investments  to 
be  made  in  the  five  per  centum  bonds  of  the  United  States, 
unless  for  good  reasons  appearing  to  him,  and  which  he  shall 
report  to  Congress,  he  shall  at  any  time  deem  it  advisable  to 
invest  in  other  bonds  of  the  United  States. 

On  Feb.  21,  1879,  and  again  on  December  8,  1879,  the  Sec- 
retary recommended  that  the  law  be  so  modified  as  to  allow 
the  Secretary  of  the  Treasury,  at  his  discretion,  to  invest  such 
amounts  as  may  be  from  time  to  time  payable  to  the  fund,  in 
any  bonds  of  the  United  States,  or  in  the  first  mortgage  bonds 
of  the  roads  interested,  preference  being  given  to  the  latter 
for  the  reason  that  they  constitute  a  prior  lien  upon  all  the 
property  and  franchises  of  the  roads,  and  the  United  States, 
as  a  deferred  creditor,  being  interested  to  the  extent  of  such 
bonds. 

Investment  in  the  four,  four  and  one-half,  and  six  per 
centum  bonds  of  the  United  States  will  yield  interest  on  the 
principal  so  invested  as  follows : 

Rate  of 

Denomination  Period  interest 

to  payment  realized 

Funded  loan  of  1907,  registered  and  coupon 27.14  years  3.62 

"      "    1891,  registered    11.32  3.70 

'        "     1891,  coupon    11.32 

Currency    sixes,     registered 14.61       "  3.85 

15.50       "  3.93 

15.65       "  3.95 

15.73       "  3.95 

16.65       "  4.02 

17.65       "  4.09 

18.65       "  4.15 

The  advantage  to  the  fund  of  investments  in  other  bonds 
than  those  preferred  by  the  law  must  therefore  be  apparent 
and  for  this  reason  I  have  to  inform  Congress,  in  conformity 
with  the  requirements  of  the  statute,  that  investments  for  said 

48 


sinking  fund  will  hereafter  be  made  in  such  bonds  of  the 
United  States  as  may  be  most  advantageous  to  the  fund,  hav- 
ing a  due  regard  to  the  length  of  time  such  investments  are  to 
continue. 

Very  respectfully, 

JOHN  SHERMAN, 

Secretary. 


CHAPTER  4 

BEFORE  THE  SENATE  COMMITTEE  ON  THE 

PACIFIC  RAILROAD  DEBT. 
Washington,  D.  C.,  Thursday,  March  19,  1896. 
The  Committee  met  at  2.30  P.  M. 

Present:   Senators  Gear   (Chairman),   Stewart,  and  Brice. 

54th  Congress,  Document 

1st  Session.  SENATE.  No.  31-1. 

GOVERNMENT  DEBT  OF  THE  PACIFIC  RAILROADS. 

NOTES  OF  HEARINGS 

BEFORE  THE 
COMMITTEE  ON   PACIFIC  RAILROADS 

ON  THE 

SUBJECT   OF   THE   INDEBTEDNESS   OF   THE   PA- 
CIFIC RAILROADS  TO  THE  GOVERNMENT. 

In  the  Senate  of  the  United  States,  June  9,  1896. 
Resolved,  That  the  hearings  had  before  the  Select  Conmit- 
tee  on  the  Pacific  Railroads,  not  heretobefore  printed  as  docu- 
ments, be  printed  for  the  use  of  the  Senate. 

Attest:  WM.  R.  Cox, 

Secretary. 

STATEMENT  OR  LEONARD  C.  BLAISDELL. 
Leonard   C.   Blaisdell,   of   Indianapolis,   Ind.,   counselor   at 
law,  sworn  and  examined : 

The  Chairman.  You  may  proceed  and  make  your  statement. 

Mr.  Blaisdell.  The  statement  which  I  have  to  make  under 

oath  respecting  the  subject-matter  of  claims  represented  by 

myself  as  attorney  in  fact    of    claimants  against  the  United 

States,  will  be  found  expressed  in  case  18003  in  the  Court  of 

50 


Claims.  It  is  therein  set  forth  that  by  virtue  of  the  action  of 
the  Secretary  of  the  Treasury  and  of  the  First  Comptroller 
of  the  Treasury  on  April  22,  1884,  the  rights,  privileges,  and 
franchises  of  these  creditors  of  the  Union  Pacific,  the  Cen- 
tral Pacific,  and  other  Pacific  Railroad  Companies  (to  which 
were  granted  loans  by  the  United  States  in  aid  of  the  con- 
struction of  these  roads  and  telegraph  lines  to  the  amount  of 
$64,623,512),  were  made  subject  to  the  rights  of  the  lawful 
and  just  holders  of  the  lien  prior  and  paramount  to  that  of 
the  United  States,  as  expressed  in  the  eighth  section  of  the 
act  of  1864,  and  as  further  expressed  in  the  eighth  section 
of  what  is  commonly  named  the  Thurman  Act. 

That  on  the  said  date,  a  contract  or  agreement  was  entered 
into  with  myself,  by  which  the  United  States  undertook  to 
issue  call  bonds  on  the  said  Pacific  Railroad  Companies,  pay- 
able January  1,  1885,  at  the  sub-treasury  in  the  city  of  New 
York.  It  was  further  agreed  that  the  amount  of  interest  on 
the  accrued  indebtedness,  so  described  as  of  lien  paramount  to 
that  of  the  United  States,  should  be  converted  into  United 
States  sinking  fund  bonds,  bearing  the  rate  of  5  per  cent  in- 
terest, to  date  from  March  3,  1883,  and  made  payable  by  the 
United  States  on  August  16,  1894.  I  further  state  that  the 
complete  statement  in  relation  to  all  the  particulars  of  this 
transaction  has  been  heretobefore  made  repeatedly,  and 
finally  under  the  determination  of  the  late  President  Harrison, 
and  will  be  found  in  pamphlet  form  with  the  Executive,  and 
also  copies  with  the  Secretary  of  the  Treasury,  with  the 
Secretary  of  the  Interior  Department,  and  in  the  Department 
of  Justice.  Certified  copies  under  oath  will  be  found  in  all 
the  Departments. 

The  Chairman.    Have  you  a  copy  of  that  document? 

Mr.  Blaisdell,  Yes;  I  will  furnish  full  printed  copies, 

51 


Senator  Stewart.  I  would  like  to  know  what  this  contro- 
versy is  about. 

Mr.  Blaisdell.  I  did  not  expect  to  present  the  matter  in 
full  at  this  time.  I  expected  to  get  an  appointment  to  do  so. 
We  would  have  to  go  to  our  rooms  and  bring  our  papers. 

Senator  Brice.  This  is  a  very  important  matter,  and  you 
should  have  your  documents  and  an  opportunity  to  present 
them. 

Mr.  Blaisdell.  I  did  not  expect  to  be  rushed  into  this  sub- 
ject at  all. 

Senator  Brice.  The  witness  ought  to  lay  before  the  com- 
mittee his  propositions  in  proper  order. 

Senator  Stewart.  Yes;  and  submit  a  statement  in  writing. 

Mr.  Blaisdell.  I  will  do  that. 

Adjourned  until  Saturday,  March  21,  at  11  a.  m. 

Washington,  D.  C.,  Saturday,  March  21,  1896. 
The  committee  met  at  11  a.  m.    Present,  the  chairman. 
INTEREST  ON  FIRST  MORTGAGE  BONDS. 
STATEMENT   OF   MR.   LEONARD   C.   BLAISDELL— 
Continued. 

Leonard  C.  Blaisdell  appeared  before  the  committee,  and 
submitted  the  following  statement.: 

My  own  personal  relation  to  this  matter  of  Pacific  Railroad 
bonds  began  about  the  year  1882.  During  that  year  and  the 
succeeding  one  of  1883  there  was  a  considerable  amount  of 
correspondence  between  myself  and  the  Department  of  the 
Treasury.  The  principal  part  of  such  correspondence  was 
between  myself  on  the  one  part  and  the  late  Secretary  of  the 
Treasury,  the  Hon.  Charles  J.  Folger,  and  the  late  First 
Comptroller  of  the  Treasury,  the  Hon,  William  Lawrence, 


The  subject  of  that  correspondence  was  confined  strictly 
to  a  single  question  proposed  by  me,  to  wit:  "What  bonds 
of  indemnity  to  the  United  States  were  signed  by  Charles 
Durkee,  the  late  governor  of  the  Territory  of  Utah,  during 
his  lifetime,  and  which  bonds  had  been  canceled?" 

The  greater  part  of  this  correspondence  occurred  during 
the  year  1882.  During  its  pendency,  however,  while  there 
was  no  satisfactory  answer  to  my  question,  there  was  mani- 
fested on  the  part  of  the  officials  with  whom  I  corresponded 
a  desire  to  encourage  my  further  inquiries. 

At  this  juncture,  or  the  beginning  of  the  year  1883,  it  was 
officially  communicated  to  me  "that  one  of  the  two  or  more 
bonds  of  indemnity,  signed  by  Charles  Durkee,  was  in  behalf 
of  Franklin  H.  Head  and  pertained  to  Indian  agency ;  that 
such  bonds  had  been  duly  canceled."  This  not  being  satis- 
factory (to  me)  I  made  further  inquiry  into  what  connection, 
if  any,  Mr.  Durkee  appeared  to  have  with  either  the  con- 
struction or  security  for  construction  of  any  part  of  the 
Pacific  Railroad  lines. 

The  reason  I  had  for  pressing  my  inquiries  further  was  that 
my  investigation  before  this  time  had  fully  satisfied  me  that, 
no  matter  in  what  form  consisted  the  bulk  of  the  estate  of 
Charles  Durkee,  it  had  been  sequestered  from  its  lawful  heirs. 
I  had  informed  the  Department  that  the  probate  records  of 
Kenosha  County,  Wis.,  disclosed  the  fact  that  a  "bargain  or 
assignment"  of  matters  of  estate  not  mentioned  in  inventory 
had  been  made  between  Caroline  Durkee  (the  widow  of 
Charles  Durkee)  and  one  Harry  Durkee  (an  executor  of  the 
estate),  and  that  such  procedure  had  been  in  fraud  of  the 
rights  of  next  of  kin,  claimants  as  heirs  at  law,  under  the  or- 
dinance of  1787. 

I  am  satisfied  that  it  was  this  information  alone,  unsup- 

53 


ported  by  anything  that  I  personally  knew  about  the  assets 
of  said  estate,  that  caused  me  to  receive  soon  afterwards  in- 
structions in  official  manner,  from  both  the  Secretary  of  the 
Treasury  and  the  First  Comptroller,  what  course  I  should 
pursue,  and  to  report  to  the  Department  when  I  should  have 
complied  with  instructions  and  completed  the  arrangements 
I  was  directed  to  make. 

The  directions  were  to  commence  a  suit  in  equity  procedure 
in  a  United  States  court  having  jurisdiction  over  the  person 
of  one  of  the  executors  of  the  will  of  the  late  Charles  Durkee, 
and  that  when  such  suit  should  have  been  instituted  to  report 
forthwith  to  the  head  of  the  Treasury  Department  for  further 
advices. 

Therefore,  having  complied  literally  with  these  instructions 
and  filed  the  suit  in  the  supreme  court  of  Cook  County,  in 
Chicago,  on  the  15th  day  of  April,  1884,  on  the  22d  day  of 
that  month  and  year  I  was  presented  by  the  Hon.  Joseph 
Cannon  to  the  Treasury  clerk,  Amos  Webster.  Mr.  Cannon 
requested  Mr.  Webster  to  look  over  the  papers  I  had  to  pre- 
sent him,  and,  further,  to  immediately  call  together  such  offi- 
cials as  the  papers  seemed  to  require  to  make  the  required 
investigations,  which  all  related  to  Pacific  railroad  bonds  and 
Charles  Durkee's  obligations  to  the  United  States  on  bonds  of 
indemnity. 

Within  a  short  time  there  came  into  the  Treasury  building 
Judge  Lawrence,  First  Comptroller;  Judge  Folger,  Secretary 
of  the  Treasury;  Judge  Brewster,  Attorney  General;  Secre- 
tary of  State  Frelinghuysen,  and  several  other  officers,  each 
bearing  in  hand  a  large  bundle  of  papers.  Mr.  Webster  pre- 
sented me,  and  with  little  delay  I,  with  all  these  officials,  was 
ushered  into  a  room  I  understood  to  be  the  office  of  Judge 
Lawrence,  and  he  further  continued  the  introduction  by  mak- 

54 


ing  the  statement  that  I  was  the  person  who  had  been  making 
all  the  inquiries  of  the  Department  respecting  the  relations, 
if  any,  that  the  estate  of  Charles  Durkee  bore  to  the  affairs 
and  business  of  such  Department. 

Immediately  Judge  Lawrence  began  to  interrogate  me  as  to 
what  knowledge  I  had  acquirel  relative  to  the  subject  matter 
of  the  proposed  investigation.  After  ascertaining  that  I  knew 
practically  nothing  of  Charles  Durkee's  ownership  on  Pacific 
railroad  or  other  bonds  (at  that  time),  he  proceeded  to 
examine  the  power  of  attorney,  court  papers,  and  official  letters 
which  I  had  brought  with  me;  and  at  the  conclusion  of  his 
examinations  he  addressed  Judge  Folger  in  a  formal  way, 
declaring  that  the  powers  of  attorney  presented  under  the 
provisions  of  the  ordinance  of  1787  constituted  me  the  legal 
representative  of  the  late  governor  of  the  Territory  of  Utah, 
and  that  any  business  he  might  have  with  such  estate  could  be 
legally  transacted  with  myself.  Then  Judge  Folger  arose  and 
stated  what  the  business  was  that  he  desired  to  transact  and 
the  purposes  to  be  effected,  if  found  practical,  in  the  joint 
meeting  of  officials  present  and  myself. 

Judge  Folger,  then  directing  his  conversation  to  the  Attor- 
ney General,  Judge  Brewster,  rapidly  recited  the  enactments 
of  1862,  1864,  and  of  1878,  respecting  Pacific  railroads,  and 
concluded  by  stating  that  there  had  been  in  all  some  forty  or 
more  suits  between  the  Government  and  these  corporations 
over  the  question  of  what  constituted  "net  earnings"  and  the 
resultant  rights  or  privileges  of  the  Government  to  collect 
moneys  from  the  said  corporations  for  the  purposes  named 
in  the  last  enactment  mentioned,  or  the  Thurman  Act. 

At  about  this  stage  of  the  proceedings  Judge  Folger  turned 
his  attention  to  the  vast  number  of  papers,  files,  and  records 
of  various  kinds  that  lay  on  the  tables,  picking  up  different 
Brewster. 

55 


"These,"  he  said,  pointing  to  the  first  colection,  "are  the 
first-mortgage  bonds  issued  by  the  Union,  the  Central,  and 
other  Pacif'.c  railroad  corporations,  as  under  the  provisions 
of  the  act  of  1864."  Next,  he  said,  "We  have  here  a  large 
amount  of  bonds,  issued  by  the  same  corporations,  which  have 
been  issued  to  secure  payment  of  interest  accrued  on  the 
principal  bonds.  These  first-mortgage  bonds  differ  from  all 
others  in  that  they  are  guaranteed  by  act  of  Congress,  as 
lawfully  paramount  to  the  right  and  interests  of  the  United 
States  in  respect  of  its  mortgage  against  the  same  corporations 
and  each  and  every  one,"  said  he  (holding  some  of  them  up 
in  his  hands,  so  as  to  be  seen  by  all  present),  "are  assigned  to 
one,  sole,  assignee — Charles  Durkee." 

Then,  exhibiting  some  of  the  interest  bonds,  Judge  Folger 
explained  that  these,  as  well  as  the  first-mortgage  bonds, 
were  issued  in  the  form  of  call  bonds,  by  the  terms  of 
which,  on  any  default  being  made  in  the  payment  of  the  same 
on  the  demand  of  the  legal  holder  or  his  legal  representatives, 
the  right  of  foreclosure  immediately  vested  in  the  holder. 
"Therefore,"  said  he,  "I  have  contended  against  the  practice 
heretobefore  adopted,  of  treating  these  bonds  as  payments  of 
interest,  however  good  they  may  be  as  securities,  and  have  con- 
ones  in  his  hand  as  he  continued  his  remarks  to  Judge 
tended  that  they  do  not,  within  the  meaning  of  the  law,  con- 
stitute payment  of  the  interest.  To  you,  Judge  Brewster,  I 
present  the  question  for  your  decision."  Judge  Brewster 
promptly  replied:  "Judge,  I  fully  concur  in  your  conclusion. 
That  is  my  judgment  also."  Then,  Judge  Folger  immediately 
turned  himself  about,  and,  facing  me,  said:  "You  have  just 
heard  the  decision  of  Judge  Brewster,  the  Attorney  General. 
What  do  you  want  done  with  these  bonds?" 

56 


I  answered:  "I  should  prefer  to  leave  the  whole  matter  to 
your  discretion,  Judge  Folger.  I  can  not  determine  what  dis- 
position shall  be  made  of  these  bonds ;  that  is  for  you  to  say." 

"Let  me  put  the  question  this  way:  Do  you  want  these 
mortgages  foreclosed  ?" 

Mr.  Blaisdell.  "That  depends  upon  how  much  money  can 
be  realized  out  of  them  without  foreclosure." 

Judge  Folger :  "I  think  that  the  amount  of  the  Central's 
bonds,  with  the  interest  accrued,  might  be  collected  by  giving 
plenty  of  time." 

Mr.  Blaisdel:  "What  is  the  amount  of  the  Central's  bonds?" 

Judge  Folger:  "$25,885,120." 

Mr.  Blaisdell :  "You  think  that  amount  could  be  realized  on 
a  call,  do  you?" 

Judge  Folger:  "Yes,  sir." 

Mr.  Blaisdell :  "Let  it  be  called  then." 

Judge  Folger:  "At  what  date?" 

Mr.  Blaisdell :  "At  the  end  of  the  fiscal  year." 

Addressing  then  the  accounting  officers,  Secretary  Folger 
said: 

"Make  an  estimate  of  the  value  of  these  bonds  with  the  in- 
terest to  accrue  to  date." 

It  was  made,  but  while  being  made  other  conversation  was 
going  on  between  the  Secretary  and  myself,  he  giving  me  in- 
formation and  instructions  to  guide  me. 

Receiving  the  paper  from  the  accounting  officers,  on  which 
the  estimate  had  been  made,  he  remarked  with  apparent  sur- 
prise :  "Why,  that  amounts  to  almost  as  much  as  the  sum  total 
of  all  the  original  bonds.  I  fear  that  if  so  much  is  called  at  one 
time  there  will  be  a  failure.  Could  you  not  extend  the  time  on 
part  of  the  payments?" 

"Certainly,"  I  said,  "I  am  not  so  anxious  to  get  it  all  at 


once  as  I  am  to  at  once  get  good  security  for  the  whole.  Take 
as  much  time  as  you  desire  to  make  the  calls  in,  provided  only 
that  we  hold  the  United  States  securities  for  our  money  in- 
stead of  Pacific  railroad  bonds." 

Judge  Folger:  "How  would  the  1st  of  January  next  (1885) 
do?" 

"That  will  do,"  I  said',  "I  was  only  solicitous  to  get  the  job 
off  my  hands  and  into  yours,  and  the  only  care  that  I  have  is 
to  see  that  the  security  shall  pass  from  the  Pacific  railroads 
to  the  United  States,  so  that  I  shall  look  to  the  Government, 
and  not  to  the  Pacific  railroads  for  the  payment." 

The  accounting  officers,  at  this  stage  of  proceedings,  picked 
up  their  pencils  and  made  a  new  computation  of  interest  to 
January  1,  1885. 

Judge  Folger:  "But  you  must  remember  that  there  is  a 
great  deal  more  of  this  indebtedness  to  be  looked  after.  What 
are  you  going  to  do  with  the  balance  of  it;  that  of  the  other 
roads?" 

Mr.  Blaisdell:  "Well,  we  want  to  collect  it." 

Judge  Folger:  "Should  there  be  an  attempt  to  collect  the 
whole  amount  due,  as  under  the  terms  of  the  forfeiture,  the 
property  of  these  corporations  would  fail  to  make  anything 
near  the  amount  required,  and  the  Government  would  get 
absolutely  nothing.  I  would  like  to  arrange  to  save  something 
for  the  Government." 

Mr.  Blaisdell:  "How  will  this  do.  Secure  to  us  the  entire 
principal  of  the  mortgages,  and  you  take  just  as  long  time  for 
the  Government  to  pay  the  accrued  interest  as  you  desire?" 

Judge  Folger.  "I  will  fix  the  date  of  the  maturity  of  the 
accrued  interest  at  that  of  the  maturity  of  the  last  bond,  or 
August  16,  1894.  At  what  date  shall  we  begin  to  compute 
the  interest  on  the  Pacific  railroad  interest  bonds  ?" 


58 


Mr.  Blaisdell :  "I  notice  you  said  that  the  last  payment  of 
interest  had  been  made  March  3,  1883.  Fix  it  at  that  date." 

Judge  Folger :  "Very  well.  Now,  what  rate  of  interest  shall 
this  fund  bear?" 

Mr.  Blaisdell :  "What  rate  of  interest  do  sinking  fund  bonds 
now  bear?" 

Judge  Folger:  "Five  per  cent  per  annum." 

Mr.  Blaisdell :  "Will  you  make  it  5  per  cent?" 

Judge  Folger:  "I  think  we  can." 

"Do  that,  then,"  said  I. 

Judge  Folger:  "Now,  what  depository  do  you  propose  to 
receive  the  principal  in?" 

Mr.  Blaisdell :  "New  York  City  subtreasury." 

Judge  Folger:  "Why  New  York  City;  why  not  Wash- 
ington ?" 

Mr.  Blaisdell:  "I  think  it  less  likely  to  get  mixed  up  with 
other  funds." 

Judge  Folger:  "Very  well,  then,  that  will  do.  Now,  is 
there  any  more  interest  to  be  paid  by  the  corporations?" 

Mr.  Blaisdell:  "No,  sir.  From  these  dates  they  will  all  be 
excused  from  the  payment  of  any  more  interest." 

Judge  Folger:  "But  I  would  like  in  some  way  to  secure  to 
the  Government  some  more  net  earnings." 

Mr.  Blaisdell :  "Well,  I  do  not  know  that  I  have  anything 
to  do  with  that." 

Judge  Folger :  "Not  directly ;  but  indirectly  it  would  aid  the 
Government,  if  you  can  make  a  demand  upon  the  Union 
Pacific  for  the  whole  of  its  net  earnings — as  a  matter  of  de- 
fault— for  payment  of  interest." 

Mr.  Blaisdell :  "Very  well ;  you  can  fix  that  to  suit  the  case." 

Judge  Folger:  "On  what  date  did  you  receive  the  last  in- 
terest?" 

59 


Judge  Folger:  "March  3,  1883." 

Mr.  Blaisdell:  "Let  it  cease  on  that  date,  then." 

To  this  proposition  Mr.  Folger  agreed. 

This  closed  the  transactions  and  the  conversation  with  me, 
excepting  that,  when  he  was  about  to  retire,  I  asked  him  what 
I  should  have  to  show  that  these  transactions  had  occurred. 
Addressing  Judge  Lawrence,  he  said:  "You,  Judge,  will  see 
to  it  that  Mr.  Blaisdell  is  supplied  with  the  proper  certificate 
of  ownership  of  these  bonds,  and  a  copy  of  the  proceedings 
and  transactions  between  himself  and  the  Government,  omit- 
ting nothing  essential  to  the  protection  of  the  interests  which 
he  represents." 

Mr.  Blaisdell  (to  Judge  Lawrence)  :  "When  shall  I  receive 
these  papers  and  certificates?" 

Judge  Lawrence :  "Oh,  you  return  for  them  in  about  a 
month.  I  think  we  will  have  everything  ready  about  that 
time." 

In  about  five  or  six  weeks  I  returned  to  Washington  again, 
and,  being  accompanied  by  Hon.  J.  G.  Cannon,  made  a  per- 
sonal application  for  the  papers  promised.  Judge  Lawrence 
manifested  a  degree  of  indifference  and  ignorance  on  the  sub- 
ject which  called  forth  from  Mr.  Cannon  this  remark:  "Why, 
Judge  Lawrence,  were  you  not  present  and  knowing  to  all  that 
transpired  in  the  interview  with  Mr.  Blaisdell?" 

Judge  Lawrence  replied :  "Certainly,  I  was ;  but,  you  know, 
Mr.  Cannon,  the  business  was  of  such  a  nature  that  it  was 
not  proper  to  make  it  a  subject  of  open  conversation,  and  you 
see  this  room  was  filled  with  promiscuous  people.  Let  Mr. 
Blaisdell  come  in  this  afternoon,  and  we  will  have  a  private 
talk,  and  I  will  tell  him  all  about  it." 

Then,  beckoning  with  his  hand  to  Joseph  A.  D.  Thompson, 
Deputy  First  Comptroller,  he  said :  "Go  with  these  gentlemen 

60 


and  introduce  Mr.  Blaisdell  to  Mr.  William  Armstrong,  the 
Commissioner  of  Railroads,  and  tell  that  officer  that  hereafter 
it  will  be  his  duty  to  report  Pacific  Railroad  matters  and  ac- 
counts to  Mr.  Blaisdell."  Mr.  Lawrence  added,  as  instruc- 
tions to  Mr.  Armstrong,  "that  he  should  take  particular  pains 
to  instruct  Mr.  Blaisdell  as  to  his  rights  and  prerogatives." 

Mr.  Armstrong  turned  to  those  pages  in  the  last  railroad 
report  which  referred  more  especially  to  the  rights  and  priv- 
ileges of  holders  of  liens  prior  and  paramount  to  that  of  the 
United  States  and  recited  to  me  the  text  important  to  my  pro- 
tection. Afterwards,  handing  me  the  report,  he  said:  •" You 
are  entitled  to  this  report,  take  it  along." 

From  that  time  to  the  present,  all  Commissioners  of  Rail- 
roads have  continued  to  furnish  me  with  railroad  reports  as 
they  have  been  published,  and  have  uniformly  forwarded  them 
to  my  address,  whether  at  Champaign,  or  Chicago,  111. 

Although  satisfied  personally  with  the  treatment  received 
from  Mr.  Armstrong,  I  felt  disappointed,  and  returned  again 
to  Judge  Lawrence,  and  expressed  to  him  my  great  dissatis- 
faction and  disappointment  in  not  discovering  anything  in  the 
reports  that  identified  the  late  Governor  Durkee,  of  Utah,  with 
any  of  the  matters  in  which,  by  reason  of  the  transactions  of 
April  2,  1884,  I  had  become  concerned  in  as  legal  representa- 
tive for  lawful  creditors. 

I  insisted  that  Judge  Lawrence  should  so  far  comply  with 
the  known  order  of  Judge  Folger  (who  then  had  retired  on 
account  of  sickness)  as  to  deliver  to  me  certificates,  or  other 
form  of  written  evidence,  that  I  was  the  the  legal  representa- 
tive of  the  creditors  of  the  Government  in  these  matters.  He 
then  promised  me  that  as  soon  as  the  terms  and  agree  net  its 
made  with  respect  to  Pacific  railroads  in  the  matter  should 
have  been  fully  carried  into  effect,  and  accountings  fully  com 

61 


pleted,  that  he  would  supply  me  with  certified  copies  of  every 
transaction  that  had  occurred  in  the  matter  with  me. 

Accepting  this  promise  as  having  been  made  in  good  faith, 
I  then  returned  to  my  home  in  Champaign,  111.  The  time  from 
the  second  to  the  third  visit  to  Washington  was  about  six  or 
seven  months.  During  this  time  a  number  of  letters  passed 
between  myself  and  the  Treasury  Department.  Generally  my 
letters  were  answered  in  person  by  Judge  Lawrence.  The 
answers  were  generally  brief,  and  uniformly  evasive  on  every 
question  of  vouchers  and  certificates. 

I  came  the  third  time  in  January,  1885 ;  waited  on  Senator 
Cullom,  who  wrote  a  letter  of  introduction  to  the  Assistant 
Secretary  of  the  Treasury,  Jonathan  Tarbell,  requesting  such 
officer  to  give  me  special  attention  for  the  time  I  had  to  spend 
with  him.  This  he  did,  and  we  spent  the  entire  day  in  the  ex- 
amination of  large  bundles  of  papers  brought  to  us  by  clerks, 
with  the  view  of  selecting  the  most  important,  and  of  finding, 
if  practicable,  "how  and  when  Pacific  Railroad  bonds  were 
assigned  to  Charles  Durkee,  deceased,  and  the  papers  showing 
the  rights  of  his  heirs." 

The  result  was  disappointing  to  Mr.  Tarbell,  as  well  as  my- 
self, and  he  proposed  to  continue  the  examination  the  next 
day.  Owing,  however,  to  my  engagements  in  the  suit  that 
had  been  placed  under  my  management,  by  an  arrangement 
with  the  Secretary  of  the  Treasury,  that  was  still  pending  in 
Chicago,  I  felt  compelled  to  return  and  trust  the  further  in- 
vestigation to  Mr.  Tarbell,  who  promised  to  do  for  me  the  best 
he  could.  I  returned  that  night  to  Chicago. 

The  Secretary  of  State,  Mr.  Frelinghuysen,  however,  hav- 
ing a  personal  knowledge  of  the  proceedings  of  the  Secretary 
of  the  Treasury,  April  22,  1884  (having  been  present),  volun- 
tarily prepared  some  State  papers  to  be  used  in  the  case,  to 


which  he  attached  the  great  seal  of  State,  and  affixed  his 
signature,  saying  that  the  purpose  of  so  doing  was  to  enable 
me  to  save  all  the  testimony  I  had  received,  and  to  attach 
thereunto  all  that  I  should  thereafter  receive,  in  testimony  of 
the  transactions  had  with  myself. 

It  was  mutually  agreed  between  myself,  Secretary  Freling- 
huysen,  and  Secretary  Tarbell  that  search  for  the  documents 
should  continue  after  I  should  leave,  and  that  as  fast  as  dis- 
covered they  should  be  forwarded  to  me.  • 

There  were  a  few  more  documents  sent  me  after  this,  but  I 
never  received  the  certificate  of  ownership  of  the  bonds. 

Mr.  Blaisdell  dictated  to  the  stenographer  the  following  ad- 
ditional particulars: 


THE  ENTIRE  INDEBTEDNESS  EXPRESSED  IN 
UNITED  STATES  STATUTES. 

First.  The  first-mortgage  indebtedness  and  the  subsidy  in- 
debtedness being  paid,  there  exists  no  further  liability  against 
the  United  States. 

Second.  The  United  States  statutes  have  provided  and  the 
Supreme  Court  has  decided  that  there  is  but  one  class  of 
creditors  with  higher  claim  than  that  of  the  United  States. 
(See  section  8  of  the  Thurman  Act,  and  sections  4  and  5  of 
the  act  of  March  3,  1887.) 

Third.  No  records  of  the  Government  show  any  other 
claim  purporting  to  be  a  paramount  lien  to  that  of  the  United 
States  except  the  claim  represented  by  L.  C.  Blaisdell. 

Fourth.  The  act  of  March  3,  1887,  is  a  complete  statuary 
preparation  and  provision  directing  the  Secretary  of  the 
Treasury  to  clear  off  such  paramount  lien. 

63 


If  the  parties  claiming  to  hold  paramount  lien  bonds  are 
correct  in  their  statements,  how  can  the  last  report  of  the 
Secretary  of  the  Interior  be  correct? 

The  Secretary  of  the  Interior  says  that  all  these  bonds  are 
now  matured ;  that  the  Government  holds  the  second  lien  and 
must  protect  the  property  against  the  first  lien.  And  the  stat- 
utes declare  that  the  United  States  has  but  one  lien  security — 
the  first  lien. 

See  act  of  May  7,  1878,  preamble,  pages  318  and  319,  sec- 
tion 3743  of  the  Revised  Statutes : 

All  contracts  to  be  made  by  virtue  of  any  law  and  requiring 
the  advance  of  money,  or  in  any  manner  connected  with  the 
settlement  of  public  accounts,  shall  be  deposited  in  the  offices 
of  the  First  Comptroller  of  the  Treasury  of  the  United  States, 
the  Second  Comptroller  of  the  Treasury  of  the  United  States, 
or  the  Commissioner  of  Customs,  respectively,  according  to 
the  nature  thereof,  within  ninety  days  after  their  respective 
dates. 

Section  306,  Revised  Statutes  of  the  United  States,  on  lia- 
bilities outstanding  three  years  or  more,  provides : 

That  such  sums  as  shall  stand  to  the  credit  of  any  disburs- 
ing officer  for  any  purpose,  in  liquidation  of  an  indebtedness 
.due  to  the  United  States  which  have  for  three  years  or  more 
remained  outstanding,  unsatisfied,  and  unpaid  shall  be  de- 
posited by  the  Treasurer  to  be  covered  into  the  Treasury  by 
warrant,  and  to  be  credited  to  the  credit  of  the  parties  in 
whose  favor  such  certificates,  drafts,  or  checks,  were  re- 
spectively issued,  or -to  the  person  who  are  entitled  to  receive 
pay  therefor,  and  into  an  appropriation  account,  to  be  de- 
nominated "outstanding  liabilities." 

Secretary  Foster,  in  a  statement  made  to  one  of  the  Con- 
gressional committees,  said  that  it  has  been  the  practice  of  the 

64 


Treasury  Department  to  treat  the  interest  accrued  on  the 
paramount  lien  obligations  of  the  said  Pacific  railroad  cor- 
porations as  not  maturing  until  the  maturity  of  the  last  one  of 
the  ftonds.  A  reference  to  the  reply  made  by  the  Senate 
Judiciary  Committee,  which  examined  Mr.  Foster,  will  show, 
as  I  have  been  informed,  that  the  committee  held  to  the 
opposite  view  and  stated  that  the  obligation  of  the  Govern- 
ment in  relation  to  payment  of  interest  accrued  on  such 
paramount  lien  should  date  from  the  time  when  the  Govern- 
ment assumed  the  direct  responsibility  of  payment  of  the 
bonds  of  such  lien,  to  be  determined  by  the  date  of  such  as- 
sumption. 

By  reference  to  the  act  of  March  3,  1887,  we  shall  see  that 
in  that  act  the  Secretary  of  the  Treasury  is  directed  to  satisfy 
the  claims  of  the  lawful  creditors  of  the  paramount  lien,  as 
expressed  in  the  act  of  May  7,  1878.  This  is  the  construction 
which  the  claimants  place  on  these  statutes  as  applied  to  their 
rights.  The  legal  representative  of  the  claimants  begs  leave  to 
state  that,  had  this  been  done,  as  directed  in  such  act,  it  would 
have  been  a  saving  to  the  Government  of  all  the  interest  which 
has  accrued  in  the  period  of  nine  years  that  has  passed  since 
the  enactment  of  that  law.  And,  furthermore,  that  it  would 
have  been  to  the  advantage  of  the  Government,  in  this  respect, 
that  it  would  have  become  subrogated  to  the  rights  of  the  para- 
mount lien,  by  which  all  the  property  of  the  branch  lines — 
worth  much  more  than  the  main  lines — would  have  become 
the  security  for  the  payment  of  the  Government  interest.  This, 
in  the  aggregate,  would  amount  to  a  saving  of  more  thar 
$100,000,000. 

The  Chairman.  Is  there  anything  else  that  you  desire 
to  add  to  your  statement? 

Mr.  Blaisdell.  I  have  nothing  more  to  offer  at  present.   Our 

65 


plan  is  to  submit  the  statute  quotations,  when  we  can  be  ques- 
tioned by  members  of  your  committee.  I  do  not  care  to  offer 
anything  more  until  the  committee  begins  its  interrogations. 

The  Chairman.  Have  you  citations  fro-.n  the  statutes? 

Mr.  Blaisdell.  In  abundance.  Anything  that  you  want  to 
ask.  We  have  them  already  printed,  and  will  put  them  in  the 
record,  if  the  chairman  permits  us  to  do  so. 

The  Chairman.  You  may  hand  them  to  the  stenographer 
and  have  them  printed  in  the  proceedings  of  the  committee. 

The  following  papers  were  handed  in  by  Mr.  Blaisdell,  and 
were  ordered  to  be  printed  : 

Case  18003.  In  Court  of  Claims.  L.  C.  Blaisdell  v.  The 
United  States.  Application  for  rule  on  the  Secretary  of  the 
Treasury  to  show  cause  why  judgment  should  not  be  entered 
against  the  United  States,  and  in  favor  of  the  Petitioners  and 
Claimants  v.  The  United  States. 

(Final  statement  of  Case  18003.  In  Court  of  Claims.  L.  C. 
Blaisdell  v.  The  United  States.) 

This  case  was  brought  before  the  honorable  court  through 
the  intervention  of  the  Committee  on  Claims  of  the  Fifty- 
fourth  Congress,  from  whose  files  it  will  appear  that  the  plain- 
tiff had  been  duly  presented  by  a  Member  of  that  Congress, 
the  Hon.  Wm.  M.  Springer  of  the  State  of  Illinois. 

It  was  filed  in  the  first  instance  by  the  present  claimant,  L. 
C.  Blaisdell,  in  behalf  of  not  only  the  heirs  at  law  of  the 
decedent,  Charles  Durkee,  but  in  behalf  of  all  creditors  of  the 
lien  prior  and  paramount  to  that  of  the  United  States,  as 
designated  in  the  several  acts  of  Congress,  1864-1878,  and  of 
the  act  of  March  3,  1887. 

Thus  it  appears  on  the  face  of  the  petition  that  it  was  a 

66 


claim  filed  and  founded  upon  acts  of  Congress,  which  acts 
were  in  the  petition  definitely  and  at  length  set  forth  in 
form  and  substance,  and  made  exhibits  for  the  purposes  of 
conveying  to  the  mind  of  the  court  the  foundation  upon  which 
all  rights  claimed  by  the  complainants  in  the  case  were  to  be 
ascertained.  The  rights  of  the  complainants,  whatever  they 
shall  be  ascertained  by  the  honorable  court  to  be  or  to  have 
heretobefore  been,  are  fuly  defined  in  the  Pacific  railroad  laws 
set  up,  designated,  and  pleaded  in  the  preliminary  and  informal 
petition;  in  the  more  complete  petition  following  on  the  case 
or  matter  of  the  petition  being  by  the  court  taken  for  consid- 
eration as  in  ex  parte ;  and  must  finally  appear,  not  necessarily 
from  any  or  all  of  the  answers  of  the  several  Departments, 
bureaus,  and  officers  of  the  Government,  the  information 
thereby  conveyed  to  the  court,  but  through  the  information 
conveyed  to  the  mind  of  the  court  through  statutes  of  the 
United  States,  and  specific  acts  of  Congress  defining  the  par- 
ticular rights  and  character  of  rights  set  up  and  appearing  in 
this  petition. 

It  will  only  be  necessary  to  merely  call  the  attention  of  this 
honorable  court  to  the  acts  of  Congress  that  have  been  duly 
presented*  to  it  as  the  authority  for  bringing  this  claim  herein 
presented — that  can  be  required  of  the  complainants  in  the 
case  to  present. 

The  information  that  has  been  filed  with  this  honorable 
court  by  the  attorney  of  record  in  the  case — and  that  particular 
portion  of  it  which  classifies  as  "official  matter"  certified  by  the 
several  Departments,  Bureaus,  and  officers  *of  the  Govern- 
ment— disclose  a  state  of  facts  which  precludes  the  possibility 
of  there  being  hereafter,  at  this  time,  by  or  through  any  De- 
partment, Bureau,  or  officer  of  the  Government,  a  state  of 
facts,  to  it  presented  that  shall  run  counter  to  or  in  any 

67 


material  form  modify  the  conclusions  which  the  court  may 
draw  from  that  which  has  been  already  thus  presented. 

A  summary  of  these  facts  thus  presented,  and  that  have 
been  on  file  with  this  honorable  court  for  the  greater  part 
of  the  two  years  last  preceding  the  present  date,  shows  to  the 
honorable  court  all  the  essential  information  necessary  that  it 
shall  have  obtained  before  proceedig  to  enter  final  judgment  in 
the  cause  of  the  complainants  versus  the  United  States. 

As  they  embrace  a  large  part  of  the  history  of  the  Pacific 
railroad  system,  their  operations,  duties,  and  obligations  were 
as  expressed  in  the  United  States  Statutes ;  and  so  great  a 
portion  of  the  detailed  information  is  to  be  conveyed  to  the 
court  through  official  reports  of  the  Auditor  of  Railroad  Ac- 
counts, in  the  first  instance  (and  Railroad  Commissioner's  re- 
ports in  the  latter  instance)  it  is  deemed  in  order  to  present 
first  the  annual  report  of  the  Auditor  of  Railroad  Accounts 
to  the  Secretary  of  the  Interior  for  the  year  ending  June  30, 
1878. 

On  page  6  of  this  report  occur  the  words : 

"The  act  of  Congress  approved  May  7,  1878  (chap.  96,  p. 
56,  20  Stat.  L.,  1877-78),  entitled  'An  act  to  alter  and  amend 
the  act  entitled  "An  act  to  aid  in  the  construction"  of  a  rail- 
road and  telegraph  line  from  the  Missouri  River  to  the  Pa- 
cific Ocean,  *  *  *  approved  1862,"  *  *  *  and  "to  alter 
and  amend  act  of  1864,"  in  amendment  of  said  first-named 
act,  requires : 

"That  the  net  earnings  mentioned  in-  said  act  of  1862,  of 
said  railroad  companies,  respectively,  the  Central  Pacific  Rail- 
road Company  of  California  and  the  Union  Pacific  Railroad 
Company,  shall  be  ascertained  by  deducting  from  the  gross 
amount  of  their  earnings,  respectively,  the  necessary  expenses 
paid  within  the  year  in  operating  the  same  and  keeping  the 


same  in  a  state  of  repair,  and  also  the  sum  paid  by  them, 
respesctively,  within  the  year  in  discharge  of  interest  on  their 
first-mortgage  bonds." 

On  the  first  proposition,  to  wit,  the  amount  paid  by  these 
companies  "within  any  given  year  in  operating  their  railroad 
and  telegraph  lines  and  in  keeping  the  same  in  a  state  of  re- 
pair," it  is  not  proposed  to  make  any  remarks.  But  the  sec- 
ond proposition,  namely,  "with  the  amount  paid  by  them,  re- 
spectively, within  the  year  or  at  any  other  time,  in  discharge 
of  interest  on  their  first-mortgage  bonds,"  with  this  proposition 
we  do  propose  to  deal. 

It  is  made  the  basis  of  the  rights  set  up  by  the  complainants 
against  the  United  States  that  the  interest  accrued  upon  these 
first-mortgage  bonds,  to  wit: 

Union   Pacific    $27,236,512 

Central   Pacific   25,885,120 

Denver  Pacific,  Railroad  and  Telegraph  Company 

(Western  Pacific)    1,970,560 

Kansas  Pacific    , 1,600,000 

Central  Branch  Union  Pacific  Railroad  Company.  1,600,000 

Sioux  City  and  Pacific  Railroad  Company 1,628,320 

A  total  first-mortgage  debt  and  indebtedness  lien  prior  and 
paramount  to  that  of  the  United  States  of  $64,623,512,  with 
interest  accrued  thereon  at  the  rate  of  6  per  cent  per  annum, 
was  until  the  dates,  respectively,  March,  A.  D.  1883,  and  Jan- 
uary 1,  A.  D.  1885,  the  debt  and  the  expressed  indebtedness  of 
these  railroad  and  telegraph  companies,  jointly  and  severally, 
to  such  parties  and  persons  as  were  expressed  and  designated 
in  "certain  files  and  records  of  the  Treasury  Department"  and 
which  were  referred  to  in  these  terms  by  Hon.  William  Law- 

69 


rence,  nnder  the  date  of  December  3,  A.  D.  1884,  and  at  such 
date  became,  by  contract,  an  indebtedness  of  the  United 
States. 

That  the  names  of  "the  lawful  and  just  holders  of"  the  said 
"lien  prior  and  paramount  to  that  of  the  United  States"  have 
not  appeared  of  record  within  the  knowledge  of  this  honor- 
able court,  and  have  never  yet  been  produced  (so  far  as 
known)  before  any  committee  of  either  House  of  Congress 
nor  reported  in  any  railroad  report  required  by  law  to  have 
contained  them,  constitutes  no  evidence  and  no  rebutal  of  the 
testimony  that  first-mortgage  creditors  answering  to  that 'de- 
scription do  not  exist,  for  we  can  not  consistently  believe  that 
when  such  mortgages  of  such  description  and  of  such  char- 
acter of  lien  have  been  so  well  provided  with  protection  in 
the  expressed  provisions  of  the  acts  of  Congress — 1864,  1878, 
and  1887 — that  the  very  "liens"  or  incumbrances  thus  openly 
recognized  by  such  acts  of  Congress  could  exist  independently 
of  an  expressed  ownership  of  such  character  of  mortgages  in 
the  Department  of  the  Treasury  and  the  Department  of  the 
Interior,  both  of  which  said  Departments  contain  the  most 
conclusive  evidence  and  recorded  proofs  that  such  bonds  do 
exist. 

The  Departments  just  named  above  have,  it  is  true,  failed 
to  produce  the  "evidence"  called  for  by  the  complainants  in  the 
first  instance  and  by  the  honorable  court  in  the  second  instance, 
that  such  mortgage  bonds  do  exist ;  but  these  acts  of  Congress 
just  referred  to,  more  especially  the  preamble  to  the  act  of 
May  7,  1878,  declare  that  the  Union  Pacific  Railroad  Company 
named  in  this  and  the  other  said  acts  of  Congress,  and  the 
Central  Pacific  Railroad  Company  and  others  therein  named, 
"did  and  have  issued"  an  amount  of  "their  own  bonds"  equal 

70 


to  the  amount  so  issued  (as  therein  expressed)  to  them,  and 
each  of  them,  by  the  United  States. 

Furthermore,  rights  of  owners  of  bonds  thus  issued  are 
not,  in  law  or  equity,  to  be  defeated  by  the  neglect  and  refusal 
of  said  several  Departments,  or  any  officer,  bureaus,  or  heads 
of  such  Departments  to  make  and  preserve  proper  "files  and 
records"  of  the  various  transactions  that  may  have  occurred 
in  either  one. 

In  pleading  for  the  protection  of  the  rights  of  this  class  of 
creditors  of  the  United  States,  I  shall  submit  for  the  consid- 
eration of  the  honorable  court  the  general  proposition  that 
rights  thus  guaranteed  by  acts  of  Congress  are  not  to  be  de- 
feated by  "the  neglect  and  refusal  of  officers  of  the  Govern- 
ment (more  particularly  the  heads  of  the  two  Departments 
last  named)  to  keep,  preserve  for  the  use  of  this  court,  and  to 
present  the  true  and  perfect  record  of  such  transactions  oc- 
curring therein  as  have  involved  the  credit  of  the  United 
States  to  the  total  amount  named  in  the  said  Pacific  Railroad 
bonds." 

The  truth  of  this  last  proposition,  I  believe,  (is  not  ques- 
tioned by  any  head  of  any  Department  of  the  Government,  so 
far  as  I  have  yet  been  informed,  to  wit,  the  records  of  the 
Treasury  Department  do  disclose  the  "public  debt  statement; 
that  all  interest  accrued  upon  the  said  bonds  are  payable  by 
the  United  States."  To  whom  payable  is  not  disclosed.  That 
the  principal  of  the  bonds  ($64,623,512)  is  also  "payable  by 
the  United  States."  To  whom  payable  is  not  disclosed. 

Nor  is  it  disclosed  (by  record  or  information  to  Congress 
given)  when,  in  the  history  of  these  bonds,  that  portion  of 
them  became  due  and  payable  which  represented  "interest 
indebtedness  accrued  for  the  period  of  time  which  intervened 
between  issue  of  the  principal  bonds  and  the  date  of  April  22, 

71 


1884."  The  Plaintiff  in  the  case  has  alleged  the  fact  of  the 
transposition  of  a  specific  and  well-defined  and  expressed  in- 
debtedness of  these  corporations  into  an  indebtedness  of  the 
United  States.  The  Treasury  Department  corroborates  the 
fact  stated,  that  such  indebtedness  has  become  the  indebted- 
ness of  the  United  States,  but  does  not  show  when  it  so 
became  (debt  payable  by  the  United  States). 

The  Interior  (Railroad  Department  thereof)  carries  the 
same  debt  account  under  the  title  or  name  of  "Bond  indebted- 
ness," and  charges  the  same  item  against  the  United  States  as 
such,  which  the  Treasury  Department  terms  a  cash  and  "sink- 
ing fund  indebtedness."  The  information  is  thus  disclosed  to 
the  honorable  court  that  there  is  a  vast  discrepancy  between 
the  "public  debt  statement"  of  the  Secretary  of  the  Treasury 
and  that  disclosed  in  the  Department  of  the  Interior.  The 
sinking  fund  as  shown  by  the  Commissioner  of  Railroads, 
does  not  show  to  exceed  $27,000,000  (less  than  $20,000,000 
in  1884),  while  the  Treasury  Department  (unless  the  Pacific 
Railroad  Committee  under  Mr.  Outwaithe  have  misstated) 
shows  $64,000,000  of  "sinking  fund  indebtedness  of  the  Gov- 
ernment," by  reason  of  these  Pacific  Railroad  obligations,  in 
addition  to  that  shown  in  the  Department  of  the  Interior. 

To  prove  that  there  is  a  gigantic  descrepancy  and  erroneous 
statement  of  the  public  liabilities  in  this  respect,  as  between 
these  two  departments  the  honorable  court  has  but  to  summons 
Mr.  Outhwaihe  as  witness,  whom,  with  thirteen  other  mem- 
bers of  that  committee  (in  1888),  declared  "that  the  amount  of 
$64,623,512  in  cash"  was  on  the  1st  day  of  January,  1885,  an 
"outstanding  liability"  of  the  Government  by  reason  of  the 
amount  of  cash  having  been,  on  that  date,  deposited  with  the 
Secretary  of  the  Treasury  "for  the  definitely  ascertained  in- 
debtedness of  the  several  Pacific  railroad  companies  to  their 

72 


lawful  creditors"  of  the  lien  prior  and  paramount  to  that 
of  the  United  States. 

If  the  liability  of  the  United  States,  or  my  statement  of  its 
liability  in  this  respect,  and  as  alleged  in  my  petition,  both 
the  original  and  amended,  has  been  disputed  by  any  answer 
plea,  or  demurrer  filed  with  this  honorable  court,  I  am  as  yet 
not  made  aware  of  the  fact.  The  statement  has  gone  before 
the  Department  of  the  Treasury,  signed  and  sworn  to  as  set 
forth  in  my  affidavits,  and  stands  unchallenged  so  far  as  I 
know. 

The  order  of  the  court  for  the  information  that  would  deny 
the  truth  of  the  statement  has  gone  forth,  and  does  not  bring 
the  information  that  would  deny  it. 

The  statement  has  stood  in  form  and  in  print  before  the 
eyes  of  every  Secretary  of  the  Treasury  from  the  date  of 
January  12,  1889,  and  not  one  has  attempted  to  deny  it  or 
make  any  official  answer  tending  to  deny  the  truth,  substan- 
tially, of  my  statements,  as  in  petition  contained.  The  Presi- 
dent of  the  United  States  (Benjmin  Harrison,  while  Chief 
Executive)  caused  all  my  statements  to  be  placed  before  him- 
self in  official  capacity,  and  in  official  capacity  referred  them 
"for  the  official  action"  (note  the  words)  of  the  Secretary  of 
the  Treasury.  •  The  Supreme  Court  in  99  United  States  Re- 
ports supports  the  statement  of  my  petition,  that  the  United 
States  is  indebtor  to  the  "sinking  fund"  and  in  favor  of  the 
"lawful  and  just  holders  of  paramount  lien,"  as  stated,  "to  the 
full  amount  of  the  deposits  made  under  the  provisions  of  such 
sinking  fund  as  contained  in  the  act  pf  May  7,  1878."  The 
committee  referred  to  last  has  the  information  that  the  sum 
of  $64,623,512  is  and  has  been  withheld  from  the  "possession 
of  the  lawful  and  just  holders  of  such  paramount  liens  by  each 
and  every  Secretary  of  the  Treasury,  on  the  plea,  or  notion, 

73 


rather,  that  such  officer  held  discretionary  authority  to  make 
of  such  fund  a  sinking  fund." 

Congress,  by  act  of  March  3,  1887,  directed  that  officer  "to 
clear  off  such  paramount  lien  incumbrance  by  payments  (by 
payments,  mark  the  words,)  out  of  the  sinking  fund  and 
provided  that  the  entire  amount  be  paid,  whether  the  sinking 
fund  was  more  or  less  than  the  amount  due  to  the  lawful 
owners  of  such  bonds,  or  the  "lawful  creditors  of  the  para- 
mount lien  aforesaid." 

For  this  disobedience  of  the  requirement — the  direct,  posi- 
tive and  special  order  of  Congress — the  present  incumbent  in 
that  office  is  answerable.  He  can  not  and  does  not  answer 
either  Congress  or  this  honorable  court  that  he  knows  not  the 
lawful  creditors  of  the  United  States;  that  he  has  no  legal 
knowledge  of  them  that  he  is  bound  by  law  to  take  cogni- 
zance of. 

He  appears  .to  rest  contentedly  upon  "want  of  information, 
such  information  as  would  create  an  official  liability  on  his  part 
to  answer"  the  demands  made  by  me  on  the  United  States 
Treasury.  He  acts,  or  rather,  neglects  to  act;  and  rests  upon 
the  assumption  that  his  neglect  and  refusal  to  answer  me  in 
official  manner,  either  by  affirmation  or  by  denial  of  the  claims 
I  have  filed,  prevents  the  consummation  of  my  purpose  to  en- 
force an  accounting  from  him ;  and  he  acts  as  if  he  expected 
that  the  entire  body  of  Congress  and  the  Supreme  Court,  in- 
cluding this  honorable  court,  would  unitedly  be  unable  to  com- 
pel him  either  to  affirm  or  deny  my  right  to  an  accounting,  and 
thus  prevent  not  only  myself  and  my  clients  from  obtaining  the 
benefits  of  those  acts  of  Congress  upon  which  we  rely  for  pro- 
tection, but  that  all  possible  creditors  of  such  lien,  as  Congress 
provided  should  be  secured  to  "its  lawful  holders"  (should 
others  than  myself  and  clients  proved  to  be  "lawful  benefi- 

74 


ciaries")  would  be  powerless  and  the  courts  named  and  Con- 
gress itself  be  powerless  to  enforce  against  his  will  the  pay- 
ment of  the  sums  due. 

With  these  statements  I  have  concluded  to  include  the  fol- 
lowing motion :  That  the  Secretary  of  the  Tresury  be,  and, 
with  the  approval  of  this  honorable  court,  is  hereby  ordered  to 
show  cause,  by  his  personal  appearance  before  this  honorable 
court,  at  the  next  ensuing  rule  day,  why  judgment  should  not 
be  rendered  in  behalf  of  the  United  States  for  the  benefit  of 
the  petitioners  and  claimants  in  said  case  and  cause,  No.  18003, 
in  acordance  with  the  statement  of  claims  against  the  United 
States  made  to  this  honorable  court. 

Very  respectfully  submitted  by 

Attorney  of  Record  in  Case  No.  18003. 
To  the  Honorable  Chief  Justice  and  Judges  thereof. 

Washington,  D.  C.,  August  19,  1901,  at  3  o'clock  p.  in. 

Met  pursuant  to  adjournment  to  continue  taking  testimony 
for  complainant.  Present  same  parties  as  before. 

Whereupon  Thomas  J.  Abel,,  a  witness  of  competent  age, 
produced  on  the  part  of  the  complainant,  and  being  first  duly 
sworn  acording  to  law,  was  examined  and  testified  as  follows : 

Q.  Please  state  your  name,  age,  residence  and  occupation. 

A.  Thomas  J.  Abel,  63  years  past ;  Decatur,  111.    Merchant. 

Q.  Are  you  acquainted  with  Mr.    Leonard  C.  Blaisdell? 

A.  Yes,  sir. 

Q.  How  long  have  you  known  him? 

A.  About  seven  or  eight  years. 

Q.  You  say  you  were  present  before  the  Senate  committee, 
5-ith  Congress,  First  Session,  when  Mr.  Blaisdell  testified? 

A.  Yes,  sir. 

Q.  Who  else  was  there? 

75 


A.  Oh,  a  host  of  them;  Mr.  Blaisdell,  and  his  friends;  I 
can't  enumerate  them. 

Q.  You  need  not  enumerate  them.  Was  there  anybody 
else? 

A.  Yes;  we  were  encouraged  by  Senators  and  Representa- 
tives from  all  over  the  country  (17). 

Q.  From  this  Pacific  Railroads  Committee? 

A.  No,  sir. 

Q.  Who  were  the  Senators  you  talked  about? 

Mr.  Gould:  I  object  to  this  as  immaterial  and  incompetent. 

A.  Prominent  among  them  was  Senator  White  of  Califor- 
nia and  Senator  Knute  Nelson  of  Minnesota,  and  Pettigrew  of 
South  Dakota. 

Q.  Did  you  know  any  of  the  members  of  this  committee 
before  whom  this  testimony  was  taken? 

Mr.  Gould:  Objected  to. 

A.  Yes,  sir. 

Q.  What  were  their  names  and  who  was  in  the  room  at  the 
time  the  testimony  was  taken? 

Mr.  Gould:  I  object. 

A.  Mr.  Gear  was  chairman  of  the  committee. 

Q.  Did  he  preside  there  when  Mr.  Blaisdell  gave  his  testi- 
mony and  when  Mr.  Huntington  gave  his  ? 

A.  No,  sir ;  not  when  Mr.  Huntington  gave  his  testimony. 

Q.  Did  you  see  Mr.  Blaisdell  sworn? 

A.  Yes,  sir. 

Q.  And  that  is  his  testimony  that  is  contained  in  this  doc- 
ument ? 


A.  Yes,  sir. 

Q.  And  you  prepared  the  resolution  with  Mr.  Blaisdell  that 
Mr.  Cullom  introduced  in  regard  to  this  matter? 
A.  Yes,  sir. 

THOMAS  J.  ABEX, 
Merchant,  Decatur,  III. 

Subscribed  before  me  this  20th  day  of  August,  1901. 

DUDLKY  T.  HASSAN, 
Examiner  in  Chancery. 


SUPPLEMENTAL  TO  THE  REVISED  STATUTES  OF 
THE  UNITED  STATES,  Vol.  1,  1874-1881. 

AN  ACT  to  alter  and  amend  the  Act  entitled  "An  Act  to 
aid  in  the  construction  of  a  railroad  and  telegraph  line  from 
the  Missouri  River  to  the  Pacific  Ocean,  and  to  secure  to  the 
Government  the  use  of  the  same  for  postal,  military  and  other 
purposes,"  approved  July  first,  eighteen  hundred  and  sixty- 
two,  and  also  to  alter  and  amend  the  act  of  Congress  ap- 
proved July  second,  eighteen  hundred  and  sixty-four,  in 
amendment  of  said  first-named  act. 


Section,  Pacific  Railways. 

1.  Net  earnings,  how  ascertained. 

2.  Compensation  due  from  United  States  to  be  retained ;  how  applied. 

3.  Sinking  fund. 

4.  Credits  to  and  payments  unto  fund. 

5.  Secretary  of  Treasury  to  remit  into  sinking  fund  percentage  on 
net  earnings. 

6.  No   dividend  to  be  voted,   &c.,   in   case   of   default.     Liability  of 
officers  to  repay  dividends  illegally  made. 

Penalty  on  officers,  &c.,  for  voting,  &v.,  to  pay  illegal  dividends. 

7.  Application  of  sinking  fund. 

8.  Priorities  in  application  of  sinking  fund. 

u.  Liabilities    to    United    States    constitutes    a    lien    on    property    of 
companies. 

77 


Companies   not  prevented   from   disposing  of  property  in  ordinary 
manner. 

10.  Enforcement  of  rights  of  United  States. 

11.  Forfeiture  of  franchises  on  failure  to  comply  with  this  act. 

12.  This  and  former  acts  subject  to  alteration,  repeal,  &c.     Existing 
remedies  not  affected. 

13.  This  act  deemed  as  amending  former  acts. 


PREAMBLE. 

Whereas  on  the  first  day  of  July,  Anno  Domini  eighteen 
hundred  and  sixty-two,  Congress  passed  an  act  entitled  "An 
act  to  aid  in  the  construction  of  a  railroad  and  telegraph  line 
from  the  Missouri  River  to  the  Pacific  Ocean,  and  to  secure 
to  the  Government  the  use  of  the  same  for  postal,  military, 
and  other  purposes;"  and 

Whereas,  afterward,  on  the  second  day  of  July,  Anno  Dom- 
ini eighteen  hundred  and  sixty-four,  Congress  passed  an  act 
in  amendment  of  said  first-mentioned  act;  and 

Whereas  the  Union  Pacific  Railroad  Company,  named  in 
said  acts,  and  under  the  authority  thereof,  undertook  to  con- 
struct a  railway  after  the  passage  thereof,  over  some  part  of 
the  line  mentioned  in  said  acts ;  and 

Whereas,  under  the  authority  of  the  said  two  acts,  the  Cen- 
tral Pacific  Railroad  Company  of  California,  a  corporation 
existing  under  the  laws  of  the  State  of  California,  undertook 
to  construct  a  railway,  after  the  passage  of  said  acts,  over 
some  part  of  the  line  mentioned  in  said  acts;  and 

Whereas  the  United  States,  upon  demand  of  said  Central 
Pacific  Railroad  Company,  have  heretofore  issued,  by  way 
of  loan  and  as  provided  in  said  acts,  to  and  for  the  benefit 
of  said  company,  in  aid  of  the  purposes  named  in  said  acts, 
the  bonds  of  the  United  States,  payable  in  thirty  years  from 
the  date  thereof,  with  interest  at  six  per  centum  per  annum, 

78 


payable  half  yearly  to  the  amount  of  twenty-five  million  eight 
hundred  and  eighty-five  thousand  one  hundred  and  twenty 
dollars,  which  said  bonds  have  been  sold  in  the  market  or 
otherwise  disposed  of  by  said  company ;  and 

Whereas  the  said  Central  Pacific  Railroad  Company  has  is- 
sued and  disposed  of  an  amount  of  its  own  bonds  equal  to  the 
amount  issued  by  the  United  States,  and  secured  the  same  by 
mortgage,  and  which  are,  if  lawfully  issued  and  disposed  of. 
a  prior  and  paramount  lien,  in  the  respect  mentioned  in  53  id 
acts,  to  that  of  the  United  States,  as  stated,  and  secure  1 
thereby;  and 

Whereas,  after  the  passage  of  said  acts,  the  Western  Pacific 
Railroad  Company,  a  corporation  existing  under  the  laws  of 
the  State  of  California,  did,  under  the  authority  of  Congress, 
become  the  assignee  of  the  rights,  duties  and  obligations  of 
the  said  Central  Pacific  Railroad  Company,  as  provided  in  the 
act  of  Congress  passed  on  the  third  day  of  March,  Anno  Dom- 
ini eighteeen  hundred  and  sixty-five,  and  did,  under  the  au- 
thority of  said  act  and  of  the  acts  aforesaid,  construct  a  rail- 
way from  the  city  of  San  Jose  to  the  city  of  Sacramento,  in 
California,  and  did  demand  and  receive  from  the  United 
States  the  sum  of  one  million  nine  hundred  and  seventy  thou- 
sand five  hundred  and  sixty  dollars  of.  the  bonds  of  the  United 
States  of  the  description  before  mentioned  as  issued  to  the 
Central  Pacific  Railroad  Company  and  in  the  same  manner  and 
under  the  provisions  of  said  acts ;  and  upon  and  in  respect  of 
the  bonds  so  issued  to  both  said  companies,  the  United  States 
have  paid  in  interest  to  the  sum  of  more  than  thirteen  ana 
one-half  million  dollars,  which  has  not  been  reimbursed ;  and 

Whereas  said  Western  Pacific  Railroad  Company  has 
issued  and  disposed  of  an  amount  of  its  own  bonds  equal 
to  the  amount  so  issued  by  the  United  States  to  it,  and  secured 

79 


the  same  by  mortgage,  which  are,  if  lawfuly  issued  and 
disposed  of,  a  prior  and  paramount  lien  to  that  of  the  United 
States,  as  stated,  and  secured  thereby ;  and 

Whereas  said  Western  Pacific  Railroad  Company  has  since 
become  merged  in,  and  consolidated  with,  said  Central  Pacific 
Railroad  Company,  under  the  name  of  the  Central  Pacific 
Railroad  Company,  whereby  the  said  Central  Pacific  Railroad 
Company  has  become  liable  to  all  the  burdens,  duties  and  obli- 
gations before  resting  upon  said  Western  Pacific  Railroad 
Company;  and  divers  other  railroad  companies  have  become 
merged  in  and  consolidated  with  said  Central  Pacific  Railroad 
Company;  and 

Whereas  the  United  States,  upon  the  demand  of  the  said 
Union  Pacific  Railroad  Company,  have  heretobefore  issued  by 
way  of  loan  to  it,  as  provided  in  said  acts,  the  bonds  of  the 
United  States,  payable  in  thirty  years  from  the  date  thereof, 
with  interest  at  six  per  centum  per  annum,  payable  half  yearly, 
the  principal  sums  of  which  amount  to  twenty-seven  million 
two  hundred  and  thirty-six  thousand  five  hundred  and  twelve 
dollars ;  on  v  hich  the  United  States  have  paid  over  ten  m!!Iion 
dollars  interest  over'  and  above  all  reimbursements;  which 
said  bonds  have  been  sold  in  the  market  or  otherwise  dispose?! 
of  by  said  corporation-;  and 

Whereas  said  corporation  has  issued  and  disposed  of  an 
amount  of  its  own  bonds  equal  to  the  amounts  to  issued  to  it 
by  the  L'T^lecl  States  as  aforesaid  and  secutvJ  the  same  by 
mortgage,  and  which  are,  if  lawfully  disposed  of,  a  prior  and 
paramount  lien,  in  the  respect  mentioned  in  said  acts,  to  that 
of  the  United  States,  as  stated,  and  secured  thereby ;  and 

Whereas  the  total  liabilities  (excluisve  of  interest  to  accrue  ) 
to  all  creditors,  including  the  United  States,  of  said  Central 
Pacific  Railroad  Company,  amount  in  the  aggregate  to  more 

'80 


than  ninety-six  million  dollars,  and  those  of  the  Union  Pacific 
Railroad  Company  to  more  than  eighty-eight  million  dollars ; 
and 

\Yhereas  the  United  States,  in  view  of  the  indebtedness  and 
operations  of  the  said  several  railroad  companies  respectively, 
and  of  the  disposition  of  their  respective  incomes,  are  not.  and 
cannot,  without  further  legislation,  be  secure  iir  their  inteiests 
in  and  concerning  said  respective  railroads  and  corporations, 
either  as  mentioned  in  said  acts  or  otherwise ;  and 

Whereas  a  due  regard  to  the  rights  of  said  several  com- 
panies respectively,  as  mentioned  in  said  act  of  eighteen  hun- 
dred sixty-two,  as  well  as  just  security  to  the  United  States  in 
the  premises,  and  in  respect  of  all  matters  set  forth  in  said 
act,  require  that  the  said  act  of  eighteen  hundred  and  sixty- 
two  be  altered  and  amended  as  hereinafter  enacted ;  and 

Whereas,  by  reason  of  the  premises  also,  as  well  as  for 
other  causes  of  public  good  and  justice,  the  powers  provided 
and  reserved  in  said  act  of  eighteen  hundred  and  sixty-four 
for  the  amendment  and  alteration  thereof  ought  also  to  be  ex- 
ercised as  hereinafter  enacted.  Therefore,  be  it  enacted,  etc. 

SECTION  1.  That  the  net  earnings  mentioned  in  said  act  of 
eighteen  hundred  and  sixty-two,  of  said  railroad  companies 
respectively,  shall  be  ascertained  by  deducting  from  the  gross 
amount  of  their  earnings  respectively  the  necessary  expenses 
actually  paid  within  the  year  in  operating  the  same  and  keep- 
ing the  same  in  a  state  of  repair,  and  also  the  sum  paid  by 
them  respectively  within  the  year  in  discharge  of  interest  on 
their  first  mortgage  bonds,  whose  lien  has  priority  over  the 
lien  of  the  United  States,  and  excluding  from  consideration 
all  sums  owing  or  paid  by  said  companies  respectively  for  in- 
terest upon  any  other  portion  of  their  indebtedness. 

And  the  foregoing  provision  shall  be  deemed  and  taken  as 

81 


an  amendment  of  said  act  of  eighteen  hundred  and  sixty-four, 
as  well  as  of  eighteen  hundred  and  sixty-two. 

This  section  shall  take  effect  on  the  thirtieth  day  of  June 
next,  and  be  applicable  to  all  computations  of  net  earnings 
thereafter;  but  it  shall  not  affect  any  right  of  the  United 
States  or  either  of  said  railroad  companies  existing  prior 
thereto. 

SE.C.  2.  That  the  whole  amount  of  compensation  which 
may,  from  time  to  time,  be  due  to  said  several  railroad  com- 
panies respectively  for  services  rendered  for  the  Government 
shall  be  retained  by  the  United  States,  one-half  thereof  to  be 
presently  applied  to  the  liquidation  of  the  interest  paid  and  to 
be  paid  by  the  United  States  upon  the  bonds  so  issued  by  it 
as  aforesaid,  to  each  of  said  corporations  severally,  and  the 
other  half  thereof  to  be  turned  into  the  sinking  fund  herein- 
after provided  for  the  uses  therein  mentioned. 

SEC.  3.  That  there  shall  be  established  in  the  Treasury  of 
the  United  States  a  sinking  fund,  which  shall  be  invested  by 
the  Secretary  of  the  Treasury  in  bonds  of  the  United  States ; 
and  the  semi-annual  income  thereof  shall  in  like  manner,  from 
time  to  time,  be  invested,  and  the  same  shall  accumulate  and 
be  disposed  of  as  hereinafter  mentioned.  And  in  making  such 
investments  the  Secretary  shall  prefer  the  five  per  centum 
bonds  of  the  United  States,  unless,  for  good  reasons  appear- 
ing to  him,  and  which  he  shall  report  to  Congress,  he  shall  at 
any  time  deem  it  advisable  to  invest  in  other  bonds  of  th 
United  States. 

All  the  bonds  belonging  to  said  funds  shall,  as  fast  as  they 
shall  be  obtained,  be  so  stamped  as  to  show  that  they  belong 
to  said  fund,  and  that  they  are  not  good  in  the  hands  of  other 
holders  than  the  Secretary  of  the  Treasury  until  they  have 

82 


been  endorsed  by  him,  and  publicly  disposed  of  pursuant  to 
this  act. 

SEC.  4.  That  there  shall  be  carried  to  the  credit  of  the  said 
fund,  on  the  first  day  of  February  in  each  year,  the  one-half 
of  the  compensation  for  services  hereinbefore  named,  rend- 
ered for  the  Government  by  said  Central  Pacific  Railroad 
Company,  not  applied  in  liquidation  of  interest,  and,  in  addi- 
tion thereto,  the  said  company  shall,  on  said  day  in  each  year, 
pay  into  the  Treasury,  to  the  credit  of  said  sinking  fund,  the 
sum  of  one  million  two  hundred  thousand  dollars,  or  so  much 
thereof  as  shall  be  necessary  to  make  the  five  per  centum  of 
the  net  earnings  of  its  said  road  payable  to  the  United  States 
under  said  act  of  eighteen  hundred  and  sixty-two,  and  the 
whole  sum  earned  by  it  as  compensation  for  services  ren- 
dered for  the  United  States,  together  with  the  sum  by  this 
section  required  to  be  paid,  amount  in  the  aggregate  to  twen- 
ty-five per  centum  of  the  whole  net  earnings  of  said  railroad 
company,  ascertained  and  defined  as  hereinbefore  provided, 
for  the  year  ending  on  the  thirty-first  day  of  December  next 
preceding. 

That  there  shall  be  carried  to  the  credit  of  the  said'  fund, 
on  the  first  day  of  February  in  each  year,  the  one-half  of  the 
compensation  for  services  hereinbefore  named,  rendered  for 
the  Government  by  said  Union  Pacific  Railroad  Company,  not 
applied  in  liquidation  of  interest ;  and,  in  addition  thereto,  the 
said  company  shall,  on  said  day  in.  each  year,  pay  into  the 
Treasury,  to  the  credit  of  said  sinking  fund,  the  sum  of  eight 
hundred  and  fifty  thousand  dollars,  or  such  thereof  as  shall 
be  necessary  to  make  the  five  per  centum  of  the  net  earnings 
of  its  said  road  payable  to  the  United  States  under  said  act  of 
eighteen  hundred  and  sixty-two,  and  the  whole  sum  earned 
by  its  compensation  for  services  rendered  for  the  United 

83 


States,  together  with  the  sum  by  this  section  required  to  be 
paid,  amount  in  the  aggregate  to  twenty-five  per  centum  of 
the  whole  net  earnings  of  said  railroad  company,  ascertained 
and  defined  as  hereinbefore  provided,  for  the  year  ending  on 
the  thirty-first  day  of  December  next  preceding. 

SEC.  5.  That  whenever  it  shall  be  made  satisfactorily  to  ap- 
pear to  the  Secretary  of  the  Treasury,  by  either  of  said  com- 
panies, that  seventy-five  per  centum  of  its  net  earnings  as 
hereinbefore  defined  for  any  current  year  are,  or  were  insuffi- 
cient to  pay  the  interest  for  such  year  upon  the  obligations  of 
such  company  in  respect  of  which  obligations  there  may  exist 
(see  act  March  3rd,  1887),  a  lien  paramount  to  that  of  the 
United  States  and  that  such  interest  has  been  paid  out  of  such 
net  earnings,  said  Secretary  of  the  Treasury  is  hereby  au- 
thorized, and  it  is  made  his  duty,  to  remit  for  such  current 
year  so  much  of  the  twenty-five  per  centum  of  net  earnings 
required  to  be  paid  into  the  said  sinking  fund,  as  aforesaid,  as 
may  have  been  thus  applied  and  used  in  the  .payment  of  in- 
terest as  aforesaid.  . 

(Note:  For  example,  if  the  sum  of  19  million  dollars  shall 
appear  to  the  satisfaction  of  the  Secretary  of  the  Treasury  as 
having  been  applied  by  the  corporation  to  the  liquidation  of 
"interest  accrued  on  mortgages  of  the  paramount  lien,"  it  is 
the  duty  of  said  officer  of  the  Government  to  remit  an  equal 
amount  of  the  sums  due  to  the  United  States  on  subsidy  debt, 
from  said  corporations,  which  would  in  practice,  eliminate  the 
entire  subsidy  debt,  when  the  whole  amount  due  to  the  United 
States  should  be  covered  by  the  equal  sums  paid  in  interest 
upon  the  bonds  whose  lien  are  paramount  to  that  of  the 
United  States.) 

SEC.  6.  That  no  dividend  shall  be  voted,  made,  or  paid  for 
or  to  any  stockholder  or  stockholders  in  either  of  said  com- 

84 


panics  respectively  at  any  time  when  the  said  company  shall 
be  in  default  in  respect  of  the  payment  of  either  the  sums  re- 
quired as  aforesaid  to  be  paid  into  said  sinking  fund,  or  in  re- 
spect of  the  payment  of  the  said  five  per  centum  of  the  net 
earnings,  or  in  respect  of  the  interest  upon  any  debt  the  lien 
of  which,  or  of  the  debt  on  which  it  may  accrue,  is  paramount 
to  that  of  the  United  States. 

(This  prohibits  and  makes  unlawful  the  dividends,  and  all 
distributions  constituting  in  effect  dividends  to  stockholders 
or  to  persons  acting  in  trust  for  stockholders,  for  no  interest 
appears  (from  records)  to  have  been  paid  to,  or  for  any  first 
mortgage,  or  paramount-lien  creditor.) 

And  any  officer  or  person  who  shall  vote,  declare,  make,  or 
pay,  and  any  stockholder  of  any  of  said  companies  who  shall 
receive  any  such  dividend  contrary  to  the  provisions  of  this 
act,  shall  be  liable  to  the  United  States  for  the  amount  there- 
of, which,  when  recovered,  shall  be  paid  into  said  sinking 
fund. 

(Note:  Under  such  terms  and  provisions  a  suit  in  equity 
brought  by  the  United  States  for  the  recovery  of  the  value 
of  the  interest  accrued  on  the  bonds  of  the  paramount  lien 
($116,000,000),  would  be  the  lawful  remedy  to  apply  in  this 
case.) 

(Note  2nd:  Under  the  terms  of  Act  of  March  3rd,  1887, 
the  position  of  the  Government  as  First  Mortgage  Creditor 
being  attained  by  conforming  to  its  provisions,  there  could  be 
no  doubt  but  that  judgment  equal  to  the  amount  stated,  could 
be  recovered  against  said  corporations  by  the  United  States ; 
to  say  nothing  about  the  principal  of  the  mortgage.) 

Penalty.  And  every  such  officer,  person,  or  stockholder 
who  shall  knowingly  vote,  declare,  make  or  pay  any  such  divi- 
dend, contrary  to  the  provisions  of  this  act,  shall  be  deemed 

85 


guilty  of  a  misdemeanor,  and,  on  conviction  thereof,  shall  be 
punished  by  a  fine  not  exceeding  ten  thousand  dollars,  and  by 
imprisonment  not  exceeding  one  year. 

SEC.  7.  (See  the  connection  with  Section  3.)  That  there 
shall  be  established,  etc.  That  the  said  sinking  fund  so  estab- 
lished and  accumulated  shall,  at  the  maturity  of  said  bonds  so 
respectively  issued  by  the  United  States,  be  applied  to  the  pay- 
ment and  satisfaction  thereof,  according  to  the  interest  and 
proportion  of  each  of  said  companies  in  said  fund,  and  of  all 
interest  paid  by  the  United  States  thereon,  and  not  reimbursed 
and  subject  to  the  provisions  of  the  next  section. 

SEC.  8.  That  the  said  sinking  fund  so  established  and  ac- 
cumulated shall,  according  to  the  interest  and  proportion  of 
said  companies  respectively  therein,  be  held  for  the  protec- 
tion, security,  and  benefit  of  the  lawful  and  just  holders  of 
any  mortgage  or  lien  debts  of  such  companies  respectively, 
lawfully  paramount  to  the  rights  of  the  United  States,  and 
for  the  claims  of  other  creditors,  if  any,  lawfully  chargeable 
upon  the  funds  so  required  to  be  paid  into  said  sinking  fund, 
according  to  the  principles  of  equity,  to  the  end  that  all  per- 
sons having  any  claim  upon  said  sinking  fund  may  be  entitled 
thereto  in  due  order. 

(Note:  But  one  claim  has  been  filed  against  said  fund;  that 
claim  is  set  forth  in  petition  No.  18,003.  But  one  party  (the 
United  States)  was,  at  such  time,  or  is  now,  known  to  have 
held  or  to  have  sought  to  hold,  an  interest  in  the  said  sinking 
fund  other  than  the  parties  claimant  under  said  petition. 
Therefore,  said  fund  is  not  "lawfully  chargeable  upon  the 
funds  by  said  Section  8  of  act  of  May  7,  1878,  required  to  be 
paid  into  said  sinking  fund,"  because,  see  further,  Section  8, 
requires  payment  to  be  made  according  to  "lawful  priorities," 
and  "lawful  priorities"  other  than  recorded  claimants  before 

86 


the  Treasury  Department,  and  said  court,  do  not  exist.) 

SEC.  9.  That  all  sums  due  to  the  United  States  from  any  of 
said  companies  respectively,  whether  payable  presently  or  not, 
and  all  sums  required  to  be  paid  to  the  United  States  or  into 
said  sinking  fund  under  said  act,  or  under  the  acts  hereinbe- 
fore referred  to  or  otherwise,  are  hereby  declared  to  be  a  lien 
upon  all  the  property  estate,  rights  and  franchises  of  every  de- 
scription granted  or  conveyed  by  the  United  States  to  any  of 
said  companies  respectively  or  jointly,  and  also  upon  all  the 
estate  and  property,  real,  personal,  and  mixed  assets  and  in- 
come of  said  several  railroad  companies  respectively  from 
whatever  source  derived,  subject  to  any  lawfully  prior  and 
paramount  mortgage,  lien  or  claim  thereon. 

(Note:  The  only  question  of  the  title  of  the  United  States 
becoming  by  force  of  the  defaults  made,  clear  and  perfected 
is:  Is  there  a  "prior  and  paramount  mortgage  lien  or  claim 
thereon?") 

(Note  2nd:  The  only  question  of  the  title  to  claim  as  set  up 
in  Court  of  Claims,  No.  18,003,  is:  Is  there,  or  can  there  be, 
any  title  paramount  to  that  of  the  United  States,  and  to  that 
set  up  in  said  claim,  set  up  in  said  Court,  adversely  to  the 
claimants  therein?) 

(Note  3rd:  If  there  is,  and  if  such  claim  can  be  so  set  up,  it 
is  the  business  of  such  claimants  to  set  it  up,  and  not  mine,  or 
that  of  the  Government  to  entertain  outside  talk  about  it.) 

But  this  section  shall  not  be  construed  to  prevent  said  com- 
panies respectively  from  using  and  disposing  of  any  of  their 
property  in  the  ordinary  proper  and  lawful  course  of  their 
current  business,  in  good  faith  and  for  valuable  consideration. 

SEC.  10.  That  it  is  hereby  made  the  duty  of  the  Attorney 
General  of  the  United  States  to  enforce  by  proper  proceedings 
against  the  said  several  railroad  companies  respectively  or 

87 


jointly,  or  against  either  of  them,  and  others,  all  rights  of  the 
United  States  under  this  act  and  under  the  acts  hereinbefore 
mentioned,  and  under  any  other  act  of  Congress  or  right  of 
the  United  States. 

And  in  any  suit  or  proceeding  already  commenced,  or  that 
may  be  hereafter  commenced,  against  any  of  said  companies, 
either  alone  or  with  other  parties,  in  respect  of  matters  aris- 
ing under  this  act  or  under  the  acts  or  rights  hereinbefore 
mentioned  or  referred  to,  it  shall  be  the  duty  of  the  Court  to 
determine  the  very  right  of  the  matter  without  regard  to  mat- 
ters of  form,  joinder  of  parties,  multifariousness,  or  other 
matters  not  affecting  the  substantial  rights  and  duties  arising 
out  of  the  matters  and  acts  hereinbefore  stated  and  referred 
to. 

SEC.  11.  That  if  either  of  said  railroad  companies  shall  fail 
to  perform  all  and  singular  the  requirements  of  this  act  and 
of  the  acts  hereinbefore  mentioned,  and  of  any  other  act  re- 
lating to  said  company,  to  be  by  it  performed  for  the  period 
of  six  months  next  after  such  performance  may  be  due,  such 
forfeiture  shall  operate  as  a  forfeiture  of  all  the  rights,  privi- 
leges, grants  and  franchises  derived  or  obtained  by  it  from 
the  United  States. 

And  it  shall  be  the  duty  of  the  Attorney  General  to  cause 
such  forfeiture  to  be  judicially  enforced. 

SEC.  12.  That  nothing  in  this  act  shall  be  taken  to  be  or  con- 
strued in  any  wise  to  affect  or  impair  the  right  of  Congress  at 
any  time  hereafter  further  to  alter,  amend,  or  repeal  the  said 
acts  hereinbefore  mentioned;  and  this  act  shall  be  subject  to 
alteration,  amendment,  or  repeal,  as,  in  the  opinion  of  Con- 
gress, justice  or  the  public  welfare  require. 

And  nothing  herein  contained  shall  be  held  to  deny,  exclude 

88 


or  impair  any  right  or  remedy  in  the  premises  now  existing  in 
favor  of  the  United  States. 

SEC.  13.  That  each  and  every  of  the  provisions  in  this  act 
contained  shall  severally  and  respectively  be  deemed,  taken, 
and  held  as  in  alteration  and  amendment  of  said  act  of  eigh- 
teen hundred  and  sixty-two,  and  of  said  act  of  eighteen  hun- 
dred and  sixty  four,  respectively,  and  of  both  said  acts.  (May 
7,  1878.) 


89 


CHAPTER  5 


Subscribed  before  Dudley  T.  Hassan,  Examiner  in  Chan- 
cery, this  14th  day  of  November,  1901. 

Whereupon,  William  R.  Russell,  a  witness  of  lawful  age, 
produced  on  the  part  of  the  complainant,  and  being  first  duly 
sworn  according  to  law,  was  examined  and  testified  as  follows : 

Direct  Examination  by  Mr.  Wood. 

Q.  State  your  name,  age,  residence,  and  occupation? 

A.  William  R.  Russell;  of  lawful  age;  Kensington,  Md. ; 
clerk  in  the  U.  S.  Treasury  Department. 

Q.  How  long  have  you  been  a  clerk  in  the  Treasury  De- 
partment ? 

A.  Twenty  years ;  I  have  charge  of  the  vault  of  the  Treas- 
urer's office. 

Q.  What  is  the  name  of  that  vault? 

A.  It  is  called  the  "Bond  Vault." 

Q.  Do  you  keep  a  record  of  the  contents  of  that  vault  ? 

A.  I  do  not ;  that  is  kept  by  the  bookkeepers.  I  merely  keep 
a  pencil  memorandum. 

Q.  The  United  States  Treasurer's  report  of  1869  on  page 
237,  shows  that  there  was  deposited  in  his  office  the  following : 
There  have  been  left  in  the  custody  of  the  Treasurer  as  spe- 
cial deposits,  within  the  fiscal  year,  as  security  that  certain 
railroads,  hereinafter  mentioned,  would  be  completed  and 
equipped  according  to  the  requirements  of  the  Government 

90 


as  a  condition  precedent  to  the  issue  of  the  remaining  portion 
of  the  Government  bonds,  subsidies  as  follows: 
First  Mortgage  Coupon  Bonds  of  the  Union  Pa- 
cific Railroad  Company $1,600,000 

First  Mortgage  Coupon  Bonds  of  the  Central  Pa- 
cific Railroad  of   California 4,000,000 

Do  you  know  the  location  and  custody  of  the  first  mortgage 
bonds  of  the  Union  Pacific  Railway  Company  mentioned 
above? 

A.  I  do  not ;  I  was  not  in  the  Treasury  Department  at  that 
time. 

Q.  Is  there  any  record  kept  of  what  became  of  them  ? 

A.  If  they  were  in  any  one  of  the  funds  of  either  of  the 
Pacific  Railways,  they  were  probably  in  the  vault  when  (99)  I 
took  charge  of  it. 

Q.  Is  your  vault  the  only  place  they  would  be  kept  in? 

A.  I  do  not  know  where  the  bonds  were.  The  probability 
is  they  were  in  the  cash  room. 

Q.  Have  you  ever  run  across  the  bonds  mentioned  in  this 
trust  fund? 

A.  I  have  not. 

Q.  Have  you  any. record  in  your  custody  of  the  contents  of 
that  Bond  Vault,  showing  who  was  the  owner  of  the  first  mort- 
gage lien  on  the  Union,  Central,  Western  and  Kansas  Pacific 
Railways  ? 

A.  Some  of  these  first  mortgage  Bonds  were  in  the  vault 
since  I  have  been  in  charge. 

Q.  Are  they  there  now? 

A.  No,  sir. 

Q.  Do  you  know  what  became  of  them? 

A.  They  were  sent  to  the  Assistant  Treasurer  at  New  York 
by  messengers  and  by  express,  for  the  purpose  of  redemption 

91 


by  the  railway  companies,  being  usually  sent  in  advance  of 
their  maturity.  I  took  some  of  them  to  New  York  myself 
and  delivered  them  to  the  Assistant  Treasurer  of  the  United 
States  at  the  Sub-Treasury. 

Q.  I)id  you  make  the  collection  or  just  delivered  them  to 
the  Assistant  Treasurer  ? 

A.  I  merely  acted  as  messenger  to  take  them  to  New  York 
and  delivered  them  to  the  Assistant  Treasurer  of  the  United 
States  for  redemption  by  the  said  raikvay  companies. 

Q.  Do  you  know  what  amounts  you  delivered? 

A.  They  varied  at  the  different  times — the  first  were  dated 
in  1865  and  were  30-year  bonds.  They  began  to  mature  in 
1895 — from  that  on  to  1899,  and  were  sent  out  as  fast  as  they 
became  due. 

Q.  What  railroads  were  they  on? 

A.  Union,  Central,  Eastern  Division  of  the  Union  (100) 
or  Kansas  Pacific,  Sioux  City  and  the  Western  Pacific  Rail- 
ways. 

Q.  Do  you  recollect  the  total  amount  of  them? 

A.  I  do  not. 

Q.  Then  all  of  these  first  mortgage  bonds  have  been  passed 
out  of  your  vault  and  you  have  none  of  the  first  mortgage 
bonds  of  the  Central,  Union,  Western  or  Sioux  City  or  Kan- 
sas Pacific  Railways,  in  your  vault  or  under  your  control? 

A.  No,  sir;  they  have  all  been  sent  or  taken  to  the  Assist- 
ant Treasurer  of  the  United  States  at  New  York. 

W.  R.  RUSSELL. 

Subscribed  before  me  this  14th  day  of  November,  1901. 

DUDI,E;Y  T.  HASSAN, 
Examiner  in  Chancery. 

92 


Room  217  Bond  Building, 

Washington,  D.  C., 

September  3,  1901, 
At  10  o'clock  A.  M. 

Met  pursuant  to  adjournment  to  continue  taking  testimony 
on  behalf  of  the  complainant. 

Present:  D.  W.  Woods,  Esq.,  for  complainant;  Ashley  M. 
Gould,  Esq.,  for  defendants. 

Whereupon,  Cecil  Clay,  a  witness  of  lawful  age,  called  in 
behalf  of  the  complainant,  being  first  duly  sworn  according 
to  law,  was  examined  and  testified  as  follows : 

Direct  Examination  by  Mr.   Wood. 

Q.  State  your  riame,  age,  residence  and  occupation? 

A.  Cecil  Clay;  I  am  in  the  60th  year;  No.  1513  S  St.,  Wash- 
ington, D.  C. ;  Chief  Clerk  in  the  Department  of  Justice. 

Q.  How  long  have  you  been  Chief  Clerk  of  that  Depart- 
ment? 

A.  Since  December,  1883. 

Q.  What  are  your  duties  in  that  office? 

A.  The  ordinary  duties  of  a  chief  clerk.  I  receive  all  in- 
coming mail ;  superintend  the  filing  of  all  records,  and  record- 
ing all  correspondence  in  the  Department,  and  all  the  out- 
going mail. 

Q.  Are  your  duties  defined  by  rule  or  law  ? 

A.  Not  defined  by  either. 

Q.  Is  there  any  record  in  your  office  showing  the  state  rent 
of  the  amount  of  money  demanded  of  the  Central  Pacific  Rail- 
way in  settlement  of  the  first  mortgage  lien  on  that  railroad? 

Mr.  Gould:  I  object  to  the  question  because  it  is  irrelevant, 
immaterial  and  has  no  bearing  upon  the  issue  in  this  case. 

A.  By  making  a  thorough  examination  of  all  filed  I  could 

93 


ascertain  any  records  exists;  I  have  no  personal  knowledge 
of  any  at  present. 

Q.  Is  there  any  record  in  your  office  showing  a  statement 
(40)  of  the  amount  of  money  demanded  of  the  Union  Pacific 
Railway  in  settlement  of  the  first  mortgage  lien  on  that  rail- 
road? 

Mr.  Gould:  Same  objection. 

A.  By  making  a  thorough  examination  of  all  files  I  could 
ascertain  if  any  record  existed ;  I  have  at  present  no  personal 
knowledge  of  any. 

Q.  Is  there  any  record  in  your  office  showing  a  statement  of 
the  amounts  of  money  demanded  of  the  Western  Pacific  Rail- 
way in  settlement  of  the  first  mortgage  lien  on  that  railroad  ? 

Mr.  Gould:  Same  objection. 

A.  By  making  a  thorough  examination  of  all  files  I  could 
ascertain  if  any  record  existed ;  I  have  no  personal  knowledge 
of  any  at  present. 

Q.  Can  you  make  the  examination  and  report  to  this  ex- 
aminer ? 

Mr.  Gould :  I  instruct  the  witness  that  he  need  not  make  the 
examination  and  need  not  answer  the  question,  because  it 
irrelevant,  incompetent  and  immaterial. 

A.  Not  answered. 

Q.  Is  there  (are)  record  in  your  office  showing  who  was  the 
owner  of  the  first  mortgage  lien  on  the  Central  Pacific  Ra' 
way? 

Mr.  Gould:  I  object  to  this  question  because  it  is  irrelevant, 
incompetent  and  has  no  connection  with  the  issue  in  this  case. 

A.  I  could  not  answer  without  making  an  examination  of 
the  files. 


94 


Q.  When  can  you  make  an  examination  of  the  files  and  re- 
port what  you  find? 

Mr.  Gould:  I  object  to  this  question  because  it  is  irrelevant, 
incompetent,  and  has  no  connection  with  the  subject  sought 
to  be  brought  out. 

Q.  Is  there  any  record  in  your  office  to  show  who  (41)  was 
the  owner  of  the  first  mortgage  lien  on  the  Union  Pacific  Rail- 
way? 

Mr.  Gould:  Same  objection. 

A.  I  do  not  know ;  I  would  have  to  examine  the  files. 

Q.  When  could  you  examine  the  files? 

Mr.  Gould :  I  instruct  the  witness  not  to  answer  this  ques- 
tion on  the  basis  of  the  two  former,  until  ordered  by  the  court. 

A.  Not  answered. 

Q.  Is  there  any  record  in  your  office  to  show  who  was  the 
owner  of  the  first  mortgage  lien  on  the  Western  Pacific  Rail- 
road? 

Mr.  Gould:  Same  objection. 

A.  Not  answered. 

Q.  When  could  you  make  the  examination  and  report  to 
this  Examiner? 

Mr.  Gould:  Same  objection. 

A.  Not  answered. 

Q.  Have  you  not  made  an  examination  of  your  files  and 
found  a  statement  made  to  the  Central  Pacific  Railway  in  re- 
gard to  the  claim  of  the  first  mortgage  lien? 

Mr.  Gould:  I  object  to  the  question  for  the  reasons  given 
above. 

A.  I  looked  over  the  files,  probably  two  weeks  ago,  and 
found  a  report  made  by  Mr.  Hutchings,  but  I  do  not  know 
whether  I  am  at  liberty  to  answer  such  question  without  con- 
sulting the  Attorney  General ;  that  is,  whether  I  am  called  upon 

95 


to  say  what  is  on  the  files,  or  what  is  not  on  the  files,  without 
consulting  the  Attorney  General. 

Q.  Who  is  this  man  Hutchins  you  refer  to? 

A.  He  is  a  lawyer  and  a  special  assistant  employed  by  the 
Attorney  General. 

Q.  Is  he  the  one  that  had  charge  of  making  the  statement 
to  the  Central  Pacific  Railway  (42)  ? 

A.  No. 

Q.  Who  had  charge  of  it? 

A.  The  Attorney  General. 

Q.  What  is  his  name? 

A.  John  W.  Griggs. 

Q.  Was  the  settlement  made  in  your  office? 

Mr.  Gould:  I  object  to  the  question  because  it  is  incom- 
petent, irrelevant  and  immaterial  and  has  no  connection  with 
the  issue  in  this  case. 

A.  That  I  don't  know. 

Q.  Was  any  part  of  the  statement  made  by  you  or  known 
to  you? 

A.  I  only  know  of  it  as  a  business  being  transacted 'in  the 
department. 

Q.  In  the  correspondence  from  the  Union  Pacific  Railway 
at  any  time  since  you  have  been  chief  clerk,  have  they  asked 
who  was  the  owner  of  the  first  mortgage  lien  ? 

Mr.  Gould:  I  object  to  the  question  as  incompetent,  imma- 
terial, and  irrelevant. 

A.  I  am  entirely  ignorant  of  the  same. 

Q.  Could  you  ascertain  by  records  if  they  show  it? 

A.  I  could  ascertain  just  what  the  records  show;  that  is 
their  contents. 

Q.  Did  you  have  charge  of  the  correspondence  of  the  At- 

96 


torney  General  from  the  Central  and  Union  Pacific  Railways 
in  regard  to  the  first  mortgage  lien  ? 

A.  No,  sir;  all  such  correspondence  was  referred  directly 
to  the  Attorney  General ;  the  marks  on  the  envelopes  indicat- 
ing that  the  Attorney  General  had  special  charge  of  such 
matters. 

Q.  Could  you  find  out  from  the  records? 

A.  The  records  are  on  general  file  in  the  department. 

Q.  When  could  you  make  the  examination  and  report  the 
fact  to  this  Examiner  (43)  ? 

Mr.  Gould :  I  instruct  the  witness  that  he  need  not  make  the 
examination,  unless  instructed  to  do  so  by  the  court. 

A.  I  could  do  it  within  forty-eight  hours  after  receiving  in- 
structions from  the  court. 

Q.  I  now  read  to  you  from  page  35  of  the  report  of  the  At- 
torney General  for  1900,  under  head  of  Pacific  Railway  mat- 
ters: "On  September  19,  1900,  I  received  an  additional  divi- 
dend of  $132,942.89  on  account  of  the  deficiency  due  the 
United  States  on  account  of  the  subsidy  debt  of  the  Kansas 
Pacific  branch.  The  case  against  the  American  Loan  and 
Trust  Company,  of  Boston,  as  trustee,  the  object  of  which  is 
to  secure  on  account  of  said  deficiency  claim. certain  moneys 
in  the  hands  of  the  trust  company  which  are  the  proceeds  of 
securities  mortgages  for  the  benefit  and  further  security  of 
first  mortgage  bonds  of  the  Kansas  Pacific  Ra'lway,  and  for 
the  benefit,  protection  and  further  security  of  the  United 
States  in  respect  to  their  subsidy  bonds  and  interest  thereon,  is 
still  undisposed  of.  It  is  my  expectation  that  ultimatelv  the 
Government  will  receive  an  additional  dividend  from  this 
source.  The  total  sum  heretobefore  paid  or  secured  to  be  paid 
to  the  United  States  on  account  of  Pacific  Railway  subsidy 


claims  since  November  1st,  1897,  is  $124,544,550.84." 

Who  made  up  that  statement  in  your  office,  if  you  know  ? 

A.  It  was  made  up  by  the  Attorney  General  himself. 

Q.  Did  you  have  any  knowledge  of  the  facts  in  that  regard  ? 

A.  None  whatever. 

Q.  Is  there  anyone  who  has? 

A.  I  doubt  it,  because  the  Attorney  General  has  exclusive 
charge  of  it. 

Q.  In  the  remittance  from  your  office  to  the  Secretary  of 
the  Treasury  who  has  charge  of  the  same? 

A.  I  have  no  idea  (44). 

Q.  Who  would  have  charge  of  that  collection  and  remit- 
tance in  your  office? 

A.  I  do  not  know  how  that  money  was  paid  or  who  paid  it ; 
I  have  no  knowledge  of  who  made  the  payment. 

Mr.  Wood :  That  is  all.    Take  the  witness. 

Mr.  Gould :  I  have  no  cross-examination  until  this  has  been 
submitted  to  the  Court. 

CECIL  CLAY. 

Subscribed  before  me  this  21st  day  of  September,  1901. 

DUDLEY  T.  HASSAN, 
Examiner  in  Chancery. 

Sworn  and  subscribed  before  Dudley  T.  Hassan,  Examiner 
in  Chancery,  26th  of  August,  1901.  Washington,  D.  C. 

Eugene  B.  Daskam,  a  witness  of  lawful  age,  produced  by 
and  on  behalf  of  the  complainant,  having  been  duly  sworn,  was 
examined  by  Mr.  Wood: 

Q.  State  your  name,  age,  residence  and  occupation? 

A.  Eugene  B.  Daskam ;  60  years ;  Chief  of  the  Division  of 
Public  Money's  Office  of  the  Secretary  of  the  Treasury. 

Q.  How  long  have  you  held  that  position  ? 

A.  Since  1877. 

98 


Q.  What  position  did  you  hold  prior  to  1887,  if  any,  in  the 
Treasury  Department? 

A.  I  was  clerk  in  the  same  division  before  I  was  made  chief. 

Q.  How  long? 

A.  For  some  years. 

Q.  About  how  many? 

A.  From  1867  to  1877. 

Q.  Were  you  in  any  other  position  before  that? 

A.  Yes,  sir. 

Q.  What? 

A.  In  the  office  of  the  Third  Auditor  of  the  Treasury  De- 
partment. 

Q.  How  long  were  you  in  that  ? 

A.  Two  years. 

Q.  Were  you  in  any  office  prior  to  that? 

A.  No,  sir. 

Q.  What  year  did  your  service  in  the  Treasury  Department 
Begin? 

A.  1865. 

Q.  What  month  in  1865? 

A.  May  (19). 

Q.  What  were  your  duties  in  the  first  office  you  were  in? 

A.  To  examine  Quartermaster's  accounts. 

Q.  And  what  were  your  duties  in  the  next  position  to  which 
you  were  assigned? 

A.  To  enter  receipts  by  Collectors  of  Customs. 

Q.  And  what  in  the  next  position  you  held? 

A.  I  have  been  on  that  straight  through.  I  became  Assist- 
ant Chief  of  the  division  and  the  chief. 

Q.  What  are  your  duties  as  chief  of  the  public  money's 
division  ? 

A.  To  look  after  the  work  assigned  to  that  division.     The 

99 


Secretary's  is  divided  up  into  eight  different  divisions.  Each 
division  has  a  certain  class  of  work.  Mine  is  the  division  of 
public  moneys  and  general  receipts. 

Q.  What  business  is  assigned  to  you  as  Chief  of  the  Public 
Moneys  Division? 

A.  I  have  general  charge  of  the  clerical  force  and  the  cor- 
respondence. 

Q.  Will  you  give  us  some  idea  as  to  what  you  do.  Do  you 
have  to  decide  what  fund  public  moneys  go  to,  or  is  that  de- 
cided before  it  comes  to  you  ? 

A.  There  are  a  great  many  different  officers — public  offi- 
cers who  make  deposits  to  the  credit  of  the  United  States  and 
send  in  certificates.  I  assign  these  to  different  desks. 

Q.  Then  you  pass  upon  the  character  of  the  fund  and  send 
it  to  the  desk  to  which  it  belongs? 

A.  If  that  is  what  you  call  it.  Each  public  officer  is  obliged 
to  render  an  original  certificate  of  deposit. 

Q.  If  the  Attorney-General  collects  any  fund  and  sends 
(20)  on  account  of  it,  does  he  send  the  money  direct  to  the 
Treasury  to  the  Secretary? 

A.  Usually  he  deposits  with  the  Treasurer  to  the  credit  of 
the  United  States. 

Q.  And  makes  a  return? 

A.  No,  he  makes  no  return.  The  original  certificates  which 
he  receives  for  the  deposit  comes  to  my  division. 

Q.  I  will  ask  you  to  examine  the  Message  of  the  President  of 
the  United  States  to  the  two  Houses  of  Congress,  at  the  begin- 
ning of  the  first  session  of  the  Fifty-fifth  Congress,  in  1899  at 
page  36  of  the  message,  from  the  words,  "under  the  authority 
of  Congress,  approved  July  2,  1898,"  to  that  point  (Indicat- 
ing) ? 

A.  "A  period  of  two  years"  ? 

100 


Q.  Yes. 

A.  You  wish  me  to  read  it? 

Q.  No;  just  examine  it  and  state  in  what  fund  this  amount 
of  money  the  President  refers  to  has  been  deposited  and  cred- 
ited; and  if  not  all  in  the  same  funl,  state  in  what  fund  each 
part  of  it  went? 

Mr.  Gould:  I  note  an  objection  to  the  question  as  irreve- 
lant  and  incompetent. 

A.  I  have  read  it.  I  cannot  tell  except  in  a  general  way  if 
that  money  was  deposited  in  the  Treasury,  the  original  certifi- 
cate would  come  to  my  division,  and  in  due  course  of  time,  I 
would  prepare  a  list  on  which  a  warrant  would  be  issued,  cov- 
ering that  amount  into  the  Treasury.  The  warrant  would  be 
prepared  in  the  Warrant  Division. 

Q.  The  Warrant  Division  clerk  is  compelled  to  report  to  you 
the  amount  of  that  warrant  ? 

(21)  A.  Yes,  sir. 

Q.  I  understand  you  are  the  chief  clerk  of  the  Division  of 
public  moneys? 

A.  Yes,  sir. 

Q.  And  you  know  into  what  fund  every  one  of  these  dollars 
has  gone? 

A.  I  do  not  know  without  looking  it  up. 

Q.  I  request  you  to  make  an  examination  of  the  records  and 
to  return  here  at  the  next  session  and  state  into  what  funds 
these  moneys  I  have  called  your  attention  to  have  gone  ? 

(The  Examiner  here  read  from  his  notes,  at  request  of 
counsel  the  answer  of  witness  reported  on  page  15  of  the  rec- 
ord immediately  after  the  objection  of  Mr.  Gould.) 

Q.  And  that  would  show  exactly  to  what  fund  it  was  cred- 
ited? 

A.  Yes,  sir. 

101 


Q.  Your  books  would  show  that? 

A.  Yes,  sir. 

Q.  I  ask  you  to  ascertain  what  the  facts  are  and  report  here 
at  the  next  session — as  to  these  funds  I  have  called  your  at- 
tention to,  referred  to  in  the  President's  Message. 

The  Witness:  You  say  these  have  been  covered  into  the 
Treasury  ? 

Q.  That  is  what  the  message  says. 

Mr.  Gould:  I  object  to  the  question  because  there  is  no 
evidence  that  the  money  has  ever  been  covered  into  the  Treas- 
ury, and  I  object  further  to  the  question  because  this  witness 
has  no  control  or  custody  of  the  records,  and  has  no  right, 
authority  or  power  to  give  the  information  sought  for  by  the 
question,  and  I  instruct  the  witness  now  that  he  need  not  pro- 
duce the  records  in  pursuance  of  the  question  (22)  to  the 
Court  to  determine  whether  the  witness  shall  be  compelled  to 
answer. 

Mr.  Gould:  I  shall  reserve  my  cross-examination  of  this 
witness  until  the  Court  passes  on  this  question. 

Q.  In  order  to  make  the  record  clear,  I  will  ask  this  ques- 
tion. I  ask  you  to  examine  the  books  in  your  office  and  state 
to  what  fund  the  Union  Pacific,  cash  $58,448,223.75  has  been 
credited ;  also  to  what  fund  the  Kansas  Pacific,  cash  $6,305,000 
has  been  credited ;  also  to  what  fund  the  Central  and  Western 
Pacific,  cash  $11,798,314.14  has  been  credited;  also  the  note 
$47,050,172.36  has  been  credited ;  also  the  Kansas  and  Pacific 
dividends  for  deficiency  due  to  the  United  States,  cash 
$821,897.70;  making  a  total  of  $124,421,607.95.  Please  ex- 
amine the  records  in  your  office  and  ascertain  to  what  fund 
you,  as  Chief  of  the  Division  of  Public  Moneys,  deposited  this 
money,  and  report  to  this  Examiner  as  soon  as  you  have  as- 
certained the  fact  ? 

102 


Mr.  Gould :  When  the  witness  has  examined  the  books  and 
is  here  again,  then,  if  you  see  fit,  I  will  make  objection.  Until 
that  time  the  Examiner  nee  (jot)  certify  the  record  to  the 
Court. 

Thereupon  the  parties  adjourned  to  meet  again  at  the  same 
place  on  Thursday,  August  22nd,  at  3  p.  m. 

Washington,  D.  C., 
Thursday,  August  22,  1901. 

Three  o'clock  P.  M. 

The  parties  met  at  the  office  of  the  Examiner  pursuant  to 
adjournment. 

Present  for  complainant,  Mr.  Wood ;  present  for  defendant, 
Mr.  Gould. 

Whereupon,  the  Direct  Examination  of  Eugene  B.  Daskam 
continued  by  Mr.  Wood. 

Q.  Are  you  ready  to  answer  the  question  which  was  pend- 
ing at  the  time  the  last  session  closed  ? 

A.  I  have  written  down  by  answer. 

Mr.  Gould:  Before  the  question  is  answered,  I  desire  to 
object  to  the  question  as  incompetent,  irrevelant  and  imma- 
terial, and  as  having  no  possible  bearing  on  the  issues  involved 
in  this  case. 

The  Witness :  The  question  is,  What  fund  the  Union  Pacific 
cash  and  other  items  mentioned  have  been  credited.  My  an- 
swer is,  To  no  fund  at  all.  The  money  was  deposited  in  the 
Treasury  and  the  different  items  mentioned  are  covered  in  just 
that  way  (reading  from  memorandum). 

The  sum  of  $58,4.48,223.75  referred  to  in  the  message  was 
covered  into  the  Treasury  by  warrant  as  a  miscellaneous  re- 
ceipt derived  from  payment  of  subsidy  debt  due  from  Kansas 
Pacific  Railroad  Company. 

The  sum  of  $11,798,314.14  was  covered  into  the  Treasury 

103 


(24)  by  warrant  as  a  miscellaneous  receipt  from  part  payment 
of  indebtedness  of  the  Central  Pacific  Railroad  Company  to 
the  United  States. 

The  sum  of  $821,897.70  was  covered  into  the  Treasury  by 
warrant  as  a  miscellaneous  receipt  from  payment  of  dividend 
to  United  States  by  Receivers  of  Union  Pacific  Railroad  Com- 
pany. 

Q.  Are  you  the  chief  of  the  Miscellaneous  Division  also? 

A.  No,  sir;  the  Miscellaneous  Division  is  a  division  of  itself 
with  a  chief  of  its  own.  It  is  one  of  the  divisions  of  the  Sec- 
retary's Office,  known  as  the  Miscellaneous  Division. 

Q.  But  not  under  you? 

A.  No,  sir. 

Q.  I  see  that  under -the  Public  Debt  Division,  292,  you  have 
charged  Pacific  Railway  bonds. 

A.  There  is  no  public  debt  division  in  the  Secretary's  Office. 

Q.  Who  makes  that?  (handing  pamphlet  to  witness.) 

A.  That  is  the  report  of  the  First  Auditor.  The  First 
Auditor  has  a  division  known  as  the  Public  Debt  Division. 
That  is  a  bureau  of  the  Treasury  Department  and  has  nothing 
to  do  with  the  Secretary's  Office. 

Q.  What  Auditor  is  that  ? 

•A.  The  First  Auditor  of  the  Treasury.  The  Auditor  for 
the  Treasury  Department,  he  is  called  now. 

Q.  When  was  his  office  changed  to  that  ? 

A.  The  Dockery  Bill  changed  it.  Before  that,  they  were 
known  as  the  First,  Second,  Third,  Fourth,  Fifth,  and  Sixth 
Auditors ;  they  are  now  known  as  the  Auditors  for  the  Treas- 
ury, the  War,  Navy,  State,  and  other  Department  Post-Office ; 
that  document  you  have  is  an  old  one.  That  office  was  then 
known  as  the  First  Auditor  (250). 

Q.  Then  we  are  to  understand  that  this  money  has  been 

104 


credited  to  no  particular  fund  ? 

A.  No,  sir,  it  has  not. 

Q.  On  page  62  of  the  Annual  Report  of  the  Secretary  of  the 
Treasury  June  30,  1872,  I  find  under  the  head  of  "Trust 
Funds"  the  following :  "There  are  also  held  special  deposits  in 
sealed  packages,  the  contents  and  value  of  which  are  un- 
known." I  will  ask  if  your  department  keeps  any  record  of 
that  transaction  or  ever  did,  from  1865  down? 

A.  That  is  a  report  of  the  Treasurer  of  the  United  States 
and  contains  the  different  items  found  in  his  vaults. 

Q.  I  ask  if  your  department  keeps  any  record  of  that? 

A.  No,  sir. 

Q.  That,  you  say,  is  simply  a  matter  pertaining  to  the 
Treasurer  and  the  contents  of  his  vaults? 

A.  Yes,  sir. 

Q.  And  your  office  keeps  no  record  of  it? 

A.  Except  when  we  make  an  examination  of  the  Treas- 
urer's Office. 

Q.  Did  you  ever  make  an  examination  of  the  Treasurer's 
office  on  that  subject? 

A.  Not  on  that  subject;  but  whenever  the  Treasurer  is 
changed  an  examination  of  his  office  is  made. 

Q.  But  no  record  is  kept  of  that  in  your  office? 

A.  No,  sir. 

Q.  How  do  you  know  what  it  is  kept  in  his  vault? 

A.  I  have  been  connected  with  the  examination  several 
times,  and  know  the  working  of  his  office.  I  know  what  is 
known  as  the  "working  vault"  of  the  Treasurer,  there  are 
more  or  less  of  these  packages  found.  Some  of  them  belong 
to  clerks  and  are  just  kept  there,  and  marked  "private"  and 
"special"  (26). 

Q.  You  will  see  that  remark  is  made  after  the  heading 

105 


"Trust  Funds."  Some  other  head  of  department  might  have 
funds  in  these  for  a  short  time. 

Q.  My  question  is,  Why  are  they  denominated  "Trust 
Funds"? 

A.  Don't  you  see — 

Mr.  Gould:  One  moment.  I  object  to  the  question  as  calling 
for  a  conclusion  of  law ;  and  also  as  incompetent,  irrelevant 
and  immaterial. 

Mr.  Wood :  I  insist  that  it  is  a  conclusion  of  fact. 

The  Witness :  It  doesn't  follow  that  it  is  a  trust  fund,  if  that 
is  your  question. 

Q.  That  is  the  conclusion. 

A.  There  is  a  period  there ;  and  this  is  another  sentence  and 
another  paragraph. 

( — )  On  pages  4  and  45  of  the  same  report,  I  find  Registered 
Central  Pacific  Bonds,  registered  Union  Pacific  Bonds  and 
other  railway  bonds.  I  will  ask  you  if  your  office  keeps  any 
record  of  that,  or  if  you  know  anything  about  that? 

Mr.  Gould:  I  object  to  the  question  as  irrevelant,  incompe- 
tent, immaterial  and  as  too  general. 

( — )  It  is  a  report  of  the  Treasurer  of  the  United  States? 
It  is  his  report  and  he  knows  what  he  has  in  his  vaults.  That 
is  a  description. 

Q.  But  I  am  asking  if  your  office  keeps  any  record  of  any- 
thing connected  with  that  ? 

A.  No,  sir;  the  Treasurer's  Office  is  the  custodian  of  those 
bonds. 

Mr.  Wood :  I  offer  this  report  of  the  Secretary  of  the  Treas- 
ury for  1872,  in  evidence,  and  will  identify  it  later  on,  as  1  will 
all  the  others  I  have  offered,  by  the  Superintendent  of  Public 
Documents. 

Mr.  Gould:  Objected  to  as  irrelevant,  incompetent  and  (27) 

106 


immaterial,  and  as  having  nothing  to  do  with  the  issue  in  this 
case,  and  as  being  improperly  identified,  and  as  hearsay  evi- 
dence. 

The  Witness :  It  is  a  matter  of  regulation. 

Q.  Did  your  office  have  anything  to  do  with  the  Secretary 
who  made  the  calls  for  bonds,  May  17,  1884,  known  as  calls 
121,  182,  123,  124,  125,  126,  127? 

A.  You  mean  my  division? 

Q.  Yes. 

A.  That  oelongs  to  the  Division  of  Loans  an.:  Currency, 
Secretary's  Office. 

Q.  That  call  would  be  made  in  the  loan  division ? 

A.  Loan  and  Currency. 

Q.  You  have  kept  no  record  of  that  call  ? 

A.    No,  sir. 

Q.  Neither  before  nor  after  the  money  was  collected  ? 

A.  I  have  to  do  with  all  moneys  deposited  in  the  Treasury, 
but  I  have  nothing  to  do  with  these  calls. 

Q.  If  a  call  is  made  and  the  monney  collected,  then  you  have 
to  do  with  it? 

A.  I  have  to  do  with  money  collected,  and  the  certificates 
showing  money  deposited. 

Q.  Then  with  these  calls  made  on  May  17th  by  the  Secretary 
if  the  money  was  collected,  your  records  would  show  to  what 
fund  it  was  credited? 

A.  It  does  not  go  to  any  fund.  It  goes  into  the  general 
Treasury  with  other  moneys. 

Q.  In  this  whatever-you-call  it  they  report  what  collection 
is  made  and  from  what — 

A.  On  what  account  is  it  collected. 

Q.  And  that  you  keep  a  record  of  it  in  your  office? 

A.  Yes;  the  certificate  of  deposit.  (28) 

107 


Q.  In  issuing  the  subsidy  bonds  to  the  Union  Pacific  Rail- 
way, and  the  Central  Pacific  Railway,  was  there  any  record 
made  of  that  transaction  in  your  office  ? 

A.  No,  sir. 

Q.  You  have  nothing  to  do  with  them  ? 

A.  No,  sir. 

Q.  In  what  office  would  that  exclusively  be  set  forth  ? 

A.  Loans  and  Currency,  I  should  say. 

Q.  I  now  call  your  attention  to  the  Treasurer's  report  of 
1899,  on  page  25,  under  the  head  "Trust  Funds,"  and  ask  you 
to  read  from  the  word  commencing  "On  January  6th,  1899" 
to  the  words  "Central  Pacific  Railway  as  collateral  security  for 
the  notes." 

Mr.  Gould:  I  object  to  the  witness  being  compelled  to  read 
from  a  book  not  in  evidence,  and  I  instruct  him  that  he  need 
not  read  from  it.  If  counsel  has  any  question  to  ask  founded 
on  it,  he  can  ask  such  question. 

Q.  Mr.  Daskam,  I  now  read  what  you  requested  me  to  read : 
"On  January  6th,  1890,  $242,000  in  the  United  States  and 
Western  Pacific  bonds,  which  remained  in  the  sinking  fund  of 
the  Central  Pacific  Railroad  were  by  direction  delivered  to  the 
Secretary  of  the  Treasury  for  disposition  under  the  contract 
with  the  purchasers  of  the  last  named  road.  On  February  18 
following  there  were  reeceived  twenty  promissory  notes  of  the 
Central  Pacific  Railroad  Company  for  as  many  equal  parts  of 
the  aggregate  sum  of  $58,812,715.60,  bearing  interest  at  3  per 
cent  and  maturing  at  successive  intervals  of  six  months  from 
February  1,  1899,  but  payable  before  maturity.  By  direction 
of  the  Secretary  on  March  3,  the  first  four  notes  were  deliv- 
ered to  him  for  payment,  leaving  $47,050,172.48  in  notes  on 
hand  in  accordance  with  the  contract,  the  re-organization  (29) 
committee  of  the  road,  on  October  7,  deposited  $47,056,000  of 

108 


the  first  mortgage  bonds  of  the  Central  Pacific  Railway  Com- 
pany as  collateral  security  for  the  notes." 

I  ask  you  if  anything  pertaining  to  that  transaction  is  re- 
corded in  your  office,  or  if  you  have  any  knowledge  of  it? 

Mr.  Gould:  I  object  to  the  question  as  irrevelant,  incompe- 
tent and  immaterial,  and  as  having  no  bearing  on  any  issue 
in  this  case. 

A.  I  cannot  tell.  If  there  was  money  deposited  growing 
out  of  that  transaction  and  a  certificate  was  issued,  that  would 
come  to  my  division.  That  is  about  as  near  as  I  can  answer 
that  question. 

Q.  This  record  reveals  the  fact  that  the  notes  were  deposited 
there? 

A.  Deposited  where? 

Q.  Where  this  says  they  were.  Did  you  understand  what  I 
read? 

A.  The  notes  were  deposited  ? 

Q.  It  is  said  in  there,  delivered  to  the  Secretary  of  the 
Treasury  for  disposition  under  the  contract  with  the  pur- 
chasers of  the  last-named  road.  Now,  I  ask  you  whether  any 
record  of  these  notes  would  appear  in  your  office,  I  understand 
you  to  say  no,  but  if  there  is  any  money  growing  out  of  the 
transaction  which  was  deposited,  there  would  be  a  record  of 
that  in  your  office ;  is  that  what  you  said  ? 

A.  Yes,  sir. 

Q.  I  understand  from  you  that  if  any  money  was  paid  on 
these  notes — 

A.  If  the  notes  were  collected  and  deposited  a  certificate 
would  issue  and  it  would  come  to  my  division  (30). 

Mr.  Wood:  I  offer  that  report  in  evidence  and  will  identify 
it  later  on,  as  I  will  all  the  others  I  have  offered,  by  the  Super- 
intendent of  Documents. 


109 


Mr.  Gould:  I  object  to  the  admission  of  that  report  in  evi- 
dence, because  it  is  irrevelant,  incompetent  and  immaterial  and 
has  no  bearing  on  any  issue  in  this  case. 

The  Examiner  marked  said  pamphlet  "Complainant's  Ex- 
hibit No.  25." 

Q.  Now  read  from  page  237,  Finance  Report  of  the  Secre- 
tary of  the  Treasury,  1869,  -Treasurer's  Report,  under  the 
heading  of  "Trust  Funds"  : 

"There  remains  in  the  custody  of  the  Treasurer,  held  by  the 
Secretary  of  the  Treasury,  in  trust  for  the  Smithsonian  Fund, 
six  per  cent,  stocks  of  the  State  of  Arkansas  that  matured  in 
1868 ;  amounting  at  their  par  face  value,  interest  excluded,  to 
$538,000.  There  have  been  left  in  the  custody  of  the  Treas- 
urer as  special  deposits,  within  the  fiscal  year,  as  security  that 
certain  railroads,  hereinafter  mentioned,  should  be  completed 
and  equipped  according  to  the  requirements  of  the  Govern- 
ment, and  as  a  condition  precedent  to  the  issue  of  the  re- 
maining portion  of  the  Government  bonds,  subsidies  as  fol- 
lows, viz: 
First  Mortgage  coupon  bonds  of  the  Union  Pacific 

Railroad  Company  $1,600,000 

First  Mortgage  coupon  bonds  of  the  Central  Pacific 

Railroad  Company  of  California 4,000,000 


Total  trust  funds  held $6,138,000 

The  above  is  exclusive  of  any  special  deposits  received  and 
held  in  sealed  packages,  the  contents  of  which  are,  and  their 
value  is  unknown ;  and  of  deposits  of  the  United  States  stocks, 
held  in  trust  as  custodian  for  the  "Sinking  Fund." 

I  will  ask  you  if  any  part  of  that  Trans  (31)  action  would  be 
recorded  in  your  office? 
A.  No,  sir. 

110 


Q.  Where  would  that  record  be  kept? 

A.  In  the  Treasurer's  office,  I  should  think. 

Q.  In  your  examination  of  any  of  these  funds,  did  you  find 
any  of  these  there? 

A.    Very  likely ;  I  could  not  say.    1869  ? 

Q.  Yes. 

A.  That  is  a  little  too  early  for  me. 

Q.  What  year  did  your  examination  begin  in? 

A.  I  don't  remember. 

Q.  You  just  simply  say  there  is  no  record  in  your  office? 

A.  Not  so  far  as  I  know. 

Mr.  Wood:  This  document  I  offer  in  evidence  and  will 
identify  it  when  I  identify  the  other  documents. 

Mr.  Gould:  I  object  to  the  admission  of  this  document  as 
incompetent,  irrelevant,  and  immaterial,  and  as  having  no  con- 
nection with  any  issue  in  this  case. 

The  Examiner  marked  said  Finance  Report  as  "Complain- 
ant's Exhibit  No.  28." 

The  Witness :  My  division  was  not  organized  until  1867. 

Q.  I  now  read  from  page  35  of  the  Report  of  the  Attorney- 
General  for  1900,  Department  of  Justice,  under  the  heading 
"Pacific  Railroad  Matters,"  as  follows : 

"On  September  19,  1900,  I  received  an  additional  dividend 
of  $132,942,  on  account  of  the  deficiency  due  the  United  States 
on  account  of  the  subsidy  debt  of  the  Kansas  Pacific  branch. 
The  case  against  the  American  Loan  and  Trust  Company  of 
Boston,  as  Trustee,  the  object  of  which  is  to  secure  on  account 
of  said  deficiency  claim  certain  moneys  (32)  in  the  hands  of 
the  Trust  Company,  which  are  the  proceeds  of  securities 
mortgaged  for  the  benefit  and  further  security  of  first  mort- 
gage bonds  of  the  Kansas  Pacific  Railway,  and  for  the  benefit, 
protection,  and  further  security  of  the  United  States  in  re- 
Ill 


spect  to  their  subsidy  bonds  and  interest  thereon,  is  still  dis- 
posed of.  It  is  my  expectation  that  ultimately  the  Government 
will  receive  an  additional  dividend  from  this  source. 

"The  total  sum  heretofore  paid  or  secured  to  be  paid  to  the 
United  States  on  account  of  Pacific  Railway  subsidy  claims 
since  November  1,  1897,  is  $124,554,550.8-4." 

I  ask  you  if  any  record  of  that  entire  transaction  is  kept  in 
your  office  other  than  as  you  have  stated  ? 

Mr.  Gould:  I  object  to  the  question  as  immaterial,  incompe- 
tent, and  irrelevant  and  having  no  connection  with  the  issue 
we  are  engaged  upon  here. 

A.  I  can  only  answer  in  a  general  way  as  I  did  to  the  other 
question;  that  if  it  resulted  in  a  deposit,  a  certificate  would 
come  to  my  division  and  I  would  have  it. 

Q.  He  says  here  that  the  total  sum  heretofore  paid  or  se- 
cured to  be  paid  is  so  much.  Do  you  understand  that  to  mean 
that  he  still  holds  it  or  that  it  has  been  paid  ? 

A.  All  I  know  is  that  if  a  deposit  was  made,  I  would  get  a 
certificate  of  it. 

Mr.  Wood:  I  now  offer  this  report  in  evidence,  and  will 
identify  it  later  on  by  the  Superintendent  of  Public  Documents. 

Mr.  Gould:  I  object  to  this  book  as  irrelevant,  immaterial 
and  incompetent  and  as  not  connected  with  any  issue  in  this 
case.  (33) 

The  Examiner  marked  said  report  "Complainant's  Exhibit 

No.  — ." 

Q  I  now  read  from  Circular  No.  113,  Treasury  Depart- 
ment, called  "Information  respecting  United  States  Bonds, 
etc.,  issued  July  2,  1900,"  as  follows : 

"The  Dingley  Tariff  Act  took  effect  on  the  24th  day  of  July, 
1897  *******  "Receipts  from  Customs  and  Total  Receipts 
from  all  sources  under  the  Dingley  Act.  Twelve  months  end- 

113 


ing  July  31,  1898.  Customs,  $147,777,941.66 ;  All  sources, 
$410,141,079.53;"  then  there  is  a  figure  referring  to  a  Note, 
which  is  "Includes  $64,751,233.75  sale  of  Union  Pacific  and 
Kansas  Pacific  Railroads." 

I  will  ask  you  if  you  kept  any  record  of  any  of  that  fund 
being  paid  in  ? 

A.  The  same  answer  to  that  as  I  gave  before.  That  was 
prepared  by  A.  T.  Huntington,  Chief  of  the  Division  of  Loans 
and  Currency. 

Q.  My  question  is  whether  you  have  any  record  of  that? 

A.  How  do  I  know  whether  I  have  any  record  of  it?  If  it 
includes  a  certificate  of  deposit,  I  have  a  record  of  that. 

Q.  And  you  would  make  the  same  answer  as  to  the  other 
items  included  in  this  statement? 

A.  That  was  gotten  up  for  the  information  of  the  general 
public,  as  I  understand  from  Mr.  Huntington,  and  includes  a 
whole  lot  of  things  there. 

Q.  Your  answer  would  be  the  same  as  to  the  other  items 
included  under  other  notes  3^  and  4  of  this  statement  ? 

A.  Yes,  sir. 

Mr.  Wood :  I  offer  this  circular  in  evidence  and  will  identify 
it  when  I  have  the  Superintendent  of  Documents  on  the 
stand.  (34) 

Mr.  Gould :  I  object  to  putting  this  circular  in  evidence  as  in- 
competent, immaterial  and  irrelevant  and  as  having  no  connec- 
tion with  the  issues  involved  in  this  case. 

The  Examiner  marked  the  said  Circular  "Complainant's 
Exhibit  No.  30." 

Q.  I  read  from  page  65  of  the  Annual  Report  of  the  Secre- 
tary of  the  Treasury,  June  30,  1900 : 

"Central  Pacific  debt.  All  amounts  which  have  become  due 
under  the  agreement  dated  February  1,  1899,  for  the  settle- 

113 


ment  of  the  indebtedness  of  the  Central  Pacific  Railroad  Com- 
pany to  the  United  States  have  been  paid  by  the  railroad 
company  in  full,  including  interest  on  all  outstanding  notes  to 
August  1,  1900.  The  company  having  previously  anticipated 
payment  of  the  notes  maturing  on  or  prior  to  February  1,  1901, 
has,  during  the  current  year  anticipated  payment  of  the  note 
due  August  1,  1901,  so  that  already  one-fourth  of  the  whole 
principal  of  the  debt  has  been  paid.  The  next  payment  on  ac- 
count of  principal  does  not  mature  until  February  1,  1902." 

I  will  ask  you  if  any  record  of  those  payments  have  been 
kept  in  your  office? 

A.  I  will  make  the  same  anwer. 

Mr.  Wood :  I  offer  that  in  evidence  and  will  identify  it  when 
I  have  the  Superintendent  of  Public  Documents  on  the  stand. 

Mr.  Gould:  I  object  to  that  pamphlet  being  received  or  in- 
troduced in  evidence  as  immaterial,  irrelevant  and  incompetent 
and  having  no  connection  with  any  issue  involved  in  this  case. 

Cross-Examination,  by  Mr.  Gould. 

Q.  In  your  answer  of  the  first -question  you  today  (35)  you 
said  that  the  records  of  your  division  showed  that  the  sum  of 
$58,448,223.75  referred  to  in  the  President's  message,  was  cov- 
ered into  the  Treasury  by  warrant  as  a  miscellaneous  receipt 
derived  from  the  payment  of  the  subsidy  debt  due  from  the 
Union  Pacific  Railroad  Company.  I  will  ask  you  to  state  to 
whom  that  debt  was  due  ? 

A.  To  the  United  States. 

Q.  And  therefore  you  state  as  I  understand  that  when  the 
money  was  paid  it  was  turned  into  the  general  fund  of  the 
United  States  as  it  was  in  payment  ,of  a  debt  due  the  United 
States? 

A,  Yes  sir. 


114 


Q.  And  you  also  state  the  same  with  regard  to  the  $6,303,000 
Kansas  Pacific  cash? 

A.  Yes,  sir ;  it  was  covered  into  the  Treasury  by  warrant  as 
a  debt  from  the  Kansas  Pacific  Company. 

Q.  To  whom  was  the  debt  due? 

A.  To  the  United  States. 

Q.  And  it  was  turned  into  the  general  funds  of  the  United 
States  when  received  in  payment  of  that  debt  ? 

A.  Yes,  sir. 

Q.  And  do  you  also  answer  the  same  with  regard  to  the 
$11,798,314.14  Central  and  Western  Pacific  Company? 

A.  Yes,  sir;  it  was  covered  into  the  Treasury  by  warrant 
as  a  miscellaneous  receipt  for  the  payment  of  the  indebtedness 
of  the  Central  and  Western  Pacific. 

Q.  It  was  a  debt  due  the  United  States? 

A.  Yes,  sir. 

Q.  And  the  same  as  to  the  item  of  $821,897.70  ?  That  was 
covered  into  the  Treasury  by  warrant  as  a  miscellaneous  re- 
ceipt by  the  Receivers  of  the  Union  Pacific  Railroad  Company  ? 

A.  Yes,  sir.  (36) 

Q.  You  may  state  whether  that  was  a  debt  due  from  the 
railroad  companies  to  the  United  States. 

A.  Yes,  sir ;  and  went  into  the  Treasury  as  a  miscellaneous 
receipt  swelling  the  Treasurer's  balance,  just  the  same  as  any 
other  sort  of  receipt. 

Q.  Are  you  familiar  with  the  manner  in  which  this  debt 
due  the  United  States  by  these  railroad  companies  was  con- 
tracted? 

A.  No,  sir;  I  am  not.  I  just  know  in  a  general  way  that  the 
United  States  guaranteed  the  interest  on  the  bonds  that  were 
issued ;  that  they  owed  the  United  States  the  interest  and  prin- 
cipal. 

115 


Q.  That  is,  that  these  railroad  companies  owed  the  United 
States  for  the  principal  of  what  was  known  as  the  Subsidy 
Construction  bonds,  the  Railway  Aid  Bonds,  and  that  these 
sums  were  collected  from  the  railroads  of  these  bonds  and  the 
interest  on  them,  and  covered  into  the  Treasury  ? 

A.  Yes,  sir;  it  was  done  through  commission. 

Q.  A  commission  was  appointed  to  adjust  the  claims  of  the 
United  States? 

A.  Yes,  sir;  as  receivers. 

Q.  And,  of  course,  if  this  was  turned  into  the  Treasury  as  a 
part  of  the  general  receipts,  it  was  a  trust  fund  ? 

A.  No,  sir ;  no  more  than  the  customs  or  any  other  receipts. 
All  moneys  that  come  into  the  Treasury  in  that  way  are  de- 
posited to  the  credit  of  the  Treasurer  of  the  United  States, 
and  under  the  law  all  moneys  are  subject  to  his  drafts. 
Re-Direct  Examination,  by  Mr.  Wood. 

Q.  If  the  first  mortgage  lien  was  paid  off,  would  your  (37) 
records  say  whether  it  had  been  paid  off  ? 

Mr.  Gould :  I  object  to  the  question  as  indefinite  and  general 
and  as  irrelevant  and  incompetent.  It  does  not  state  what  first 
mortgage  liens  are  meant,  or  the  amount  of  them  on  the  rela- 
tion that  the  United  States  bears  to  them  in  any  way. 

A.  No,  sir;  we  wouldn't  know  anything  about  it. 

Q.  You  would  not  know  anything  about  the  paying  off  of 
any  indebtedness  that  that  fund  might  have  been  collected  for  ? 

A.  No. 

Q.  Well,  the  Subsidy  Bonds? 

A.  No,  sir. 

Q.  You  say  you  did  have  some  general  knowledge  as  to  the 
manner  in  which  that  indebtedness  was  contracted? 

A.  The  first  mortgage  bonds? 

Q.    Yes. 

116 


A.  No,  I  don't  know  anything  about  it. 
Q.  Your  office  has  nothing  to  do  with  paying  off  of  that 
subsidy  fund? 
A.  No,  sir. 

E.  B.  DASKAM. 
Subscribed  before  me  this  26th  day  of  August,  1901. 

DUDLEY  T.  HASSAN, 

Examiner. 


m 


CHAPTER  6 


I,  CHARLES  DURKEE,  a  resident  of  the  City  and  County 
of  Kenosha,  in  the  State  of  Wisconsin,  (for  two  years  past  and 
upwards  at  Salt  Lake,  Utah),  of  sound,  disposing  mind  and 
memory  and  mindful  of  the  uncertainty  of  this  life,  do  make 
this  my  last  will  and  testament — hereby  revoking  all  others 
heretofore  made: 

I  do  hereby  devise,  bequeath  and  convey  by  this,  my  will, 
unto  my  executors,  Harvey  Durkee,  of  Kenosha,  aforesaid, 
and  Franklin  H.  Head,  late  of  Kenosha,  now  of  Utah — and 
to  which  of  them  may  act  as  executor  and  to  the  survivor  of 
said  executors  all  my  real  and  personal  estate  rights  and  credits 
with  the  right  to  sell,  dispose  and  convey  the  same  without 
order  of  any  court  or  officer,  in  such  amounts,  and  on  such 
terms,  as  they  may  deem  for-  the  best  intentions  of  this,  my  will 
— always  taking  adequate  security  where  credit  may  be  given. 
This  is  upon  the  following  trusts,  to-wit : 

First.  To  pay  all  my  debts,  funeral  expenses,  and  for  a 
suitable  monument  for  my  grave. 

Second.  Whereas  my  beloved  wife,  Caroline  Durkee,  has 
now  settled  upon  her  an  annuity  during  her  life  of  six  hun- 
dred dollars  annually,  and  she  has  a  life  lease  of  my  home- 
stead in  Kenosha  City — I  do  herefore,  in  addition  thereto  and 
in  lieu  of  all  dower  and  right  of  dower  (which  she  will  relin- 
quish to  my  executors  in  due  form),  direct  my  said  executors 
to  invest  in  interest-paying  securities  so  much  of  my  assets 
that  the  annual  interest  thereon  will  amount  to  one  thousand 
dollars  annually;  which  sum  of  one  thousand  dollars  annually 

119 


accrued  my  acting  executor  will  pay  one  in  semi-annual  por- 
tions, during  her  natural  life,  to  my  said  wife,  Caroline. 

Third.  If  my  said  wife,  Caroline,  shall  have  any  child  or 
children  of  mine  born  to  her  either  before  or  after  my  decease 
at  any  time,  then  my  acting  executor  will  pay  out  of  the  residue 
of  such  assets,  whenever  such  child  or  children  arrives  at  the 
age  of  twenty-one  years,  the  sum  of  five  thousand  dollars  to 
each;  and  if  there  be  a  lack  of  funds,  then  so  much  as  there 
may  be,  share  and  share  alike,  after  deducting  expenses  of  ad- 
ministration. 

Fourth.  Out  of  said  assets  my  acting  executor  will  pay  to 
the  board  of  officers  of  the  free  schools  of  Kenosha  City,  Wis- 
consin, five  thousand  dollars,  to  be,  by  said  board,  expended 
in  and  towards  procuring  a  telescope  for  the  use  of  the  free 
schools  of  said  City  of  Kenosha;  which  board  or  corporate 
power  of  said  free  schools  will  make  such  rules  and  regulations 
as  to  the  care  and  use  of  said  telescope  as  shall  make  it  useful 
to  the  teachers  and  scholars  in  said  schools  for  all  time  to 
come. 

Fifth.  All  the  balance  and  residue  of  my  assets  and  prop- 
erty, of  whatever  name  and  kind,  my  executors,  or  the  acting 
one,  will  expend  for  the  cause  of  education  of  the  youth  of 
both  sexes,  in  such  way  and  manner  as  my  executor  or  execu- 
tors shall  deem  best  for  the  good  of  the  youth  as  citizens  of 
our  common  country;  and  when  on  the  decease  of  my  wife, 
Caroline,  the  said  securities  invested  to  make  the  annuity  to 
her,  shall  be  freed  from  that  charge;  then  whatever  may  re- 
main, after  providing  for  the  matters  stated  above  under  the 
third  and  fourth  subdivisions,  to  be  appropriated  under  the 
fifth  subdivision.  . 

Sixth.  If  for  any  cause  there  shall  be  no  executor,  then  I 
will  and  declare  that  the  administrator  duly  appointed  with 
this,  my  will  annexed,  shall  have  all  the  powers  and  duties  and 

120 


obligations  of  my  said  executors,  such  powers,  duties  and  obli- 
gations of  administrator  to  be  supervised  by  the  proper  court 
in  probate  that  may  make  the  appointment — and  executors 
and  administrators  to  make  due  report  to  the  proper  court  an- 
nually. 

My  desire  is  that  my  body  be  buried  in  the  cemetery,  near 
the  South  Ward,  in  the  City  of  Kenosha. 

Seventh.  My  will  also  is,  that  my  gold  watch,  chain  and 
appendages,  be  the  property  of  my  nephew,  Charles,  named 
after  me,  the  son  of  said  Harvey  Durkee,  and  that  my  execu- 
tors deliver  the  same  to  him  as,  and  for,  his  property — the 
gift  of  his  uncle. 

Xote — In  the  third  item  above  the  words  "of  mine"  duly 
interlined. 

Signed  and  sealed  at  Kenosha,  Wisconsin,  this  12th  day  of 
February,  A.  D.  1869. 

(SEAL)  CHARLES  DURKEE. 

This  instrument  executed  this  twelfth  day  of  February,  1869, 
by  Charles  Durkee  in  our  presence,  who  then  &  there  declared 
it  to  be  his  last  Will  &  testament,  &  he  requested  us  to  sign  the 
same  as  witnesses,  which  we  now  do,  in  his  presence  &  in  the 
presence  of  each  other. 

MARK  DRESSER, 
J.  J.  PETTIT, 

of  Kenosha  City,  Wisconsin. 


IN  PROBATE:  KENOSHA  COUNTY  COURT. 

To  the  Judge  of  Said  Court : 

The  petition  of  Harvey  Durkee  and  Franklin  H.  Head,  of 

121 


Kenosha,  Kenosha  County,  Wisconsin,  respectfully  represents 
that  Charles  Durkee,  late  of  Salt  Lake  City,  Utah,  deceased, 
the  14th  day  of  January,  1870,  at  Omaha,  Nebraska,  died 
testate,  as  petitioners  believe;  that  the  instrument  in  writing 
herewith  presented  to. this  court,  is  the  last  will  and  testament 
of  said  deceased,  as  petitioners  believe ;  and  that  the  said  peti- 
tioners are  the  identical  Harvey  Durkee  and  Franklin  H.  Head 
named  and  appointed  in  and  by  said  last  will  and  testament 
as  executors  thereof. 

Your  petitioners  would  further  represent  that  the  goods, 
chattels  and  personal  estate  of  said  deceased  amount  to  about 
forty  thousand  dollars;  and  that  said  deceased  left  debts  due 
and  unpaid  to  the  probable  amount  of  five  thousand  dollars.  - 

Your  petitioners  would  pray  that  a  day  be  appointed  for 
hearing  the  proofs  of  said  last  will  and  testament,  and  that 
public  notice  thereof  be  given  to  all  persons  interested,  as  this 
Court  shall  direct;  and  that  upon  the  proof  and  allowance  of 
said  will,  and  the  approval  of  the  bond  of  your  petitioners, 
letters  testamentary  be  to  them  issued  thereon ;  and  appraisers 
appointed,  according  to  the  rules  and  practice  of  this  Court. 

HARVEY  DURKEE). 
FRANKUN  H.  HEAD, 

Dated  at  Kenosha  this  24th  day  of  January,  A.  D.  1870. 

STATE  OF  WISCONSIN,  } 
Kenosha  County,        j 

On  this  24th  day  of  January,  A.  D.  1870,  before  me  person- 
ally appeared  the  above  named  Harvey  Durkee  &  Franklin  H. 
Head  and  made  oath  that  they  had  heard  read  the  above  and 
foregoing  petition,  subscribed  by  them  and  know  the  contents 
thereof,  and  that  the  same  is  true  of  their  own  knowledge, 

122 


except  as  to  the  matters  which  are  therein  stated  to  be  on  their 
information  and  belief,  and  as  to  those  matters  he  believe  it 
to  be  true. 

I.  W.  WEBSTER, 

County  Judge. 

STATE  OF  WISCONSIN,        | 
Kenosha  County  Court,  j 

In  Probate. 
In  the  matter  of  the  last  Will  &  Testament 

of 
CHARLES  DURKEE,  deceased. 

At  a  County  Court  held  in  Probate  in  and  for  the  County 
of  Kenosha  aforesaid  at  the  office  of  the  Probate  Judge  in  the 
City  of  Kenosha,  in  said  County,  on  the  24th  day  of  January, 
A.  D.  1870,  at  one  o'clock  P.  M.  of  said  day  before  the  County 
Judge  in  and  for  the  County  of  Kenosha  aforesaid : 

Present  the  Hon.  I.  W.  Webster,  County  Judge  Presiding : 

And  now  comes  Harvey  Durkee  and  Franklin  H.  Head, 
named  as  executors  and  filed  the  will  of  said  deceased  and 
their  petition  for  the  proof  of  the  same. 

Ordered  that  the  hearing  of  the  proof  of  said  will  be  heard 
on  Monday,  March  21st,  1870,  at  one  o'clock  P  .M.  of  said  day 
and  that  the  said  order  be  published  in  the  Kenosha  Union  for 
three  successive  weeks  before  the  day  of  such  hearing. 

I.  W.- WEBSTER, 

County  Judge. 

STATE  OF  WISCONSIN,  | 
Kenosha  County,        j 

BE  IT  REMEMBERED,  that  on  the  15th  day  of  April, 

123 


A.  D.  1870,  at  the  City  of  Kenosha  in  said  County,  pursuant 
to  notice,  duly  published  before  me  I.  W.  Webster,  Judge  of 
the  County  Court  of  said  County,  personally  appeared  J.  J. 
Pettit  &  Mark  Dresser  the  subscribing  witnesses  to  the  last  will 
and  testament  of  Charles  Durkee  late  of  Kenosha  county 
deceased,  and  the  said  Pettit  &  Dresser  being  duly  sworn  on 
oath,  declared  that  the  annexed  instrument  was  on  the  day  of 
the  date  thereof,  to  wit,  the  12th  day  of  February  A.  D.  1869, 
at  Kenosha  City,  in  the  County  of  Kenosha,  signed 
by  the  said  Charles  Durkee  that  the  said  Charles 
Durkee  then  and  there  acknowledged,  published  and 
declared  said  instrument  to  be  his  last  will  and  testament,  in 
the  presence  of  the  said  J.  J.  Pettit  &  Mark  Dresser  the  sub- 
scribing witnesses  thereto;  that  the  said  subscribing  witnesses 
did  then  and  there,  in  the  presence  of  said  Charles  Durkee 
severally  subscribe  said  instrument  as  witnesses  thereto;  and 
that  at  the  time  of  the  execution  and  publishing  of  said  instru- 
ment as  aforesaid,  the  said  Charles  Durkee  was  of  sound  dis- 
posing mind,  memory  and  understanding,  of  full  age  and  under 
no  restraint,  to  the  best  of  the  said  J.  J.  Pettit's  and  Mark 
Dresser's  knowledge  and  belief;  whereupon  said  instrument 
was  allowed  and  admitted  to  probate  as  and  for  the  last  will 
and  testament  of  the  said  Charles  Durkee  deceased. 

In  testimony  whereof,  I  have  hereunto  subscribed  my  name 
and  affixed  the  seal  of  the  County  Court  of  said  County,  at 
Kenosha  City  in  said  County,  this  15th  day  of  April  A.  D.  1870. 
[SEAL.]  I.  W.  WEBSTER, 

County  Judge. 

124: 


STATE  OF  WISCONSIN,  KENOSHA  COUNTY  COURT 
IN  PROBATE. 

In  the  Matter  of  the  Last       ^ 

Will  and  Testament  of        >  Kenosha  County,  ss. 
Charles  Durkee,  deceased.    J 

Be  it  remembered  that  on  this  15th  day  of  April  A.  D.  1870, 
at  the  Office  of  the  Court  of  Probate,  in  the  City  and  County 
of  Kenosha,  at  10  o'clock  A.  M.,  came  on  to  be  heard  before 
the  Hon.  I.  W.  Webster,  County  Judge,  presiding  in  the  said 
County  Court,  sitting  as  a  Court  of  Probate,  the  matter  of 
proving  an  instrument  in  writing  purporting  to  be  the  last  Will 
and  Testament,  signed  and  executed  by  said  Charles  Durkee, 
late  of  the  City  of  Kenosha,  in  said  County,  bearing  date  the 
12th  day  of  February,  A.  D.  1869,  and  purporting  to  be  attested 
by  J.  J.  Pettit  and  Mark  Dresser,  of  Kenosha  County,  as  wit- 
nesses thereto.  In  which  instrument  Harvey  Durkee  &  F.  H. 
Head,  of  Kenosha  County,  are  named  as  the  Executors  thereof. 
Due  notice  having  been  given  of  the  time  and  place  of  such 
hearing,  and  Harvey  Durkee  appearing  and  presenting  said 
instrument  in  writing,  and  it  now  here  appearing  to  this  Court 
from  the  evidence  of  J.  J.  Pettit  &  Mark  Dresser  said  sub- 
scribing witnesses,  taken  in  open  Court,  and  the  proofs  and 
petition  on  file  in  the  premises  in  this  matter,  and  this  Court 
therefrom  finds  the  facts  to  be  as  follows,  to-wit:  That  said 
Charles  Durkee  died  in  the  month  of  January,  A.  D.  1870. 
That  soon  after  his  decease  said  Instrument  in  writing  was 
delivered  into  this  Court  by  the  persons  named  therein  as 
Executors,  and  that  this  Court,  on  the  petition  of  said  last 
named  persons,  duly  filed,  did  on  the  24th  day  of  January, 
A.  D.  1870,  by  its  order  appoint  the  21st  day  of  March,  A.  D. 
1870  at  one  o'clock  in  the  afternoon,  at  the  Probate  office,  in 

125 


the  City  of  Kenosha,  for  hearing  the  proofs  of  said  instrument, 
and  that  all  concerned  might  then  and  there  appear  and  contest 
the  Probate  of  the  same  as  the  last  Will  and  Testament  of  said 
deceased.  And  this  Court  then  and  there  further  ordered  that 
public  notice  thereof  be  given  by  publication  of  said  order  in 
the  Kenosha  Union,  a  weekly  newspaper  printed  in  said  City 
of  Kenosha,  and  State  of  Wisconsin,  for  three  weeks  success- 
ively, previous  to  the  time  appointed  last  aforesaid.  That  at 
the  time  last  aforesaid,  on  motion  and  cause  shown,  the  hearing 
aforesaid  was  duly  adjourned  to  the  22d  day  of  March,  1870, 
at  one  o'clock  in  the  afternoon,  at  the  same  place.  That  at 
the  time  and  place  last  mentioned  the  hearing  of  the  said  matter 
was  for  cause  showned  continued  to  the  15th  day  of  April, 
1870,  at  ten  o'clock  in  the  forenoon.  That  at  the  time  and 
place  last  aforesaid  for  said  hearing,  it  further  appeared  to 
this  Court,  on  due  proofs  taken  and  on  file  with  its  records, 
that  pursuant  to  its  order,  public  notice  of  the  time  and  place  of 
this  hearing  had  been  given  by  publishing  said  order  as  ordered 
by  this  Court  in  the  Kenosha  Union  a  newspaper  printed  and 
published  weekly  in  Kenosha  City  aforesaid  for  three  weeks 
successively,  previous  to  the  said  time  first  appointed  for  said 
hearing,  and  after  hearing  the  proofs  and  testimony  of  said 
J.  J.  Pettit  and  Mark  Dresser  said  subscribing  witnesses,  this 
Court  finds  therefrom  the  following  facts,  to  wit:  That  said 
Charles  Durkee  signed  and  executed  the  said  intrument  in 
writing  freely  and  voluntarily  with  his  own  proper  hand  on 
the  12th  day  of  February  A.  D.  1869.  That  said  Charles 
Durkee  at  that  time  was  of  full  age,  to  wit :  about  the  age  of 
Sixty-seven  and  of  sound  mind.  That  he  signed  .the  same  in 
the  presence  of  both  of  said  subscribing  witnesses  thereto,  and 
then  and  there  published  and  declared  said  instrument  to  be 
his  last  will  and  testament  and  then  and  there  requested  said 
J.  J.  Pettit  and  Mark  Dresser  to  attest  his  execution  thereof, 


by  signing  their  names  thereto  as  witnesses,  which  they  then 
and  there  did  so  sign  the  same  in  the  presence  of  said  Charles 
Durkee  and  of  each  other.  And  this  Court  further  finds  that 
the  Real  and  Personal  Property  and  Estate  of  the  said  Charles 
Durkee,  at  the  time  of  his  decease,  amounted  to  about  the  sum 
of  fifty  thousand  dollars  or  less  in  value. 

\Yherefore  it  is  by  this  Court  now  here  considered  ordered, 
adjudged  and  decreed,  that  the  said  Instrument  in  writing  is 
duly  proved,  according  to  the  laws  and  customs  of  this  State, 
and  the  same  is  allowed  and  adjudged  to  be,  and  is  the  last  will 
and  testament  of  Charles  Durkee,  deceased,  and  the  same  is 
hereby  established,  proved,  and  admitted  to  probate  as  the  last 
will  and  testament  of  him  the  said  Charles  Durkee,  deceased. 
And  it  is  further  considered,  adjudged,  and  decreed  that  when 
the  said  Charles  Durkee  subscribed  his  name  thereto,  and  pub- 
lished and  declared  the  same  to  be  his  last  Will  and  Testament, 
he  was  of  full  age  and  sound  mind,  and  capable  of  making 
said  \Vill  in  writing;  and  it  is  further  considered  and  adjudged 
that  said  instrument  is  duly  executed  and  witnessed  as  a  Will. 
And  it  is  furthered  ordered  that  Letters  Testamentary  hereon 
be  granted  and  issued  to  Harvey  Durkee  &  F.  H.  Head,  resi- 
dents of  the  City  and  County  of  Kenosha,  in  said  State,  in  the 
form,  force  and  effect  of  Letters  Testamentary  as  by  law  pre- 
scribed in  such  cases.  •  And  it  is  further  ordered  that  a  cer- 
tificate of  this  proof  of  said  will  be  endorsed  on  said  will  or 
annexed  thereto,  as  by  law  required. 

In  testimony  whereof  I  have  hereunto  subscribed  my  name 
and  affixed  the  Seal  of  the  County  Court  of  said  County,  and 
the  proper  United  States  Revenue  stamp  and  canceled  the 
same  at  Kenosha  city  in  said  County  this  15th  day  of  April 
A.  D.  1870. 
(L.  S.)  I.  W.  WEBSTER, 

County  Judge  in  and  for  the  County  of  Kenosha. 

127 


.  STATE  OF  WISCONSIN,  J 
Kenosha  County,        ^  S 

The  State  of  Wisconsin,  to  Harvey  Durkee  &  Franklin  H. 
Head,  of  Kenosha  County,  Greeting: 

Whereas  Charles  Durkee,  late  of  the  Kenosha  City  in  the 
County  of  Kenosha  and  State  of  Wisconsin,  lately  died,  having 
first  made  and  published  his  last  will  and  testament,  and  therein 
and  thereby  appointed  Harvey  Durkee  and  Franklin  H.  Head 
Executors  of  the  said  will.  And  whereas,  on  the  fifteenth  day 
of  April  A.  D.  1870,  at  the  Probate  Office,  in  the  City  of 
Kenosha,  in  our  said  County  of  Kenosha,  before  our 
County  Court  in  and  for  said  County,  the  said  last 
will  and  the  testament  of  the  said  Charles  Durkee, 
deceased,  was  proved  and  is  now  approved  by  us  in  our  said 
County  Court:  And  whereas,  the  said  deceased  had  whilst 
living,  and  at  the  time  of  his  death,  goods,  chattels,  rights, 
credits,  or  estates  within  the  State,  whereby  the  proving  and 
registering  of  the  will,  and  the  ordering  and  granting  admin- 
istration of  all  and  singular,  the  said  goods,  chattels,  rights, 
credits,  or  estates  within  the  State,  whereby  the  proving  and 
registering  of  the  will,  and  the  ordering  and  granting  adminis- 
tration of  all  and  singular,  the  said  goods,  chattels,  rights, 
credits  and  estate,  and  also  the  auditing,  allowing  and  finally 
discharging  the  account  whereof  doth,  in  virtue  of  our  statutes 
in  such  case  made  and  provided,  belong  and  appertain  to  our 
said  County  Court.  And  whereas,  Harvey  Durkee  &  Franklin 
H.  Head,  executors  named  and  appointed  in  and  by  said  last 
will  and  testament  has  given  bond  as  required  by  law,  for  the 
faithful  execution  of  said  trust. 

Therefore,  our  said  County  Court,  by  our  authority  and 
in  our  name,  has  granted  and  hereby  does  grant  the  administra- 
tion of  all  and  singular,  the  goods,  chattels,  rights,  credits  and 

128 


estate  of  the  said  deceased,  and  in  any  way  concerning  his  said 
last  will  and  testament  unto  Harvey  Durkee  &  Franklin  H. 
Head,  Executors,  in  the  said  will  named.  And  our  said  County 
Court,  does  hereby  in  our  name  and  by  our  authority  grant 
unto  you  full  power  and  authority  to  administer,  and  faithfully 
to  dispose  of  according  to  law,  all  and  singular  the  goods, 
chattels,  rights,  credits  and  estate  which  to  the  said  deceased 
whilst  living  and  at  the  time  of  his  death,  did  belong;  also  to 
ask,  demand,  collect,  recover  and  receive  all  and  singular,  the 
debts,  claims,  demands,  rights  and  credits,  which  to  the  said 
deceased  whilst  living,  and  at  the  time  of  his  death,  did  belong; 
and  to  pay  the  debts  which  the  said  deceased  did  owe,  or  which 
he  in  the  law  stood  bound,  so  far  as  such  goods,  chattels,  rights, 
credits  and  estate  will,  under  the  order  or  decree  of  our  said 
County  Court,  enable  you  to  do.  And  you  are  hereby  required 
to  make  or  cause  to  be  made,  a  true  and  perfect  inventory  of 
the  real  estate,  and  of  all  the  goods,  chattels,  rights  and  credits, 
which  were  of  the  said  deceased  at  the  time  of  his  death,  and 
which  has  or  shall  come  to  your  possession  or  knowledge;  to 
cause  the  estate  and  effects  comprised  in  the  inventory  to  be 
exhibited  to  and  appraised  by  the  persons  lawfully  appointed 
and  sworn  for  that  purpose ;  to  make  or  cause  to  be  made  a 
separate  and  distinct  inventory  and  appraisement  of  all  the 
household  furniture  and  other  personal  property  belonging  to 
the  estate  of  the  said  deceased,  allowed  to  the  widow  of  the 
said  deceased  pursuant  to  the  provisions  of  the  statute  in  such 
case  made  and  provided;  to  return  the  same  inventories  and 
appraisements  under  your  hands  and  the  hands  of  those  by 
whom  such  appraisements  shall  be  made,  to  our  said  County 
Court  within  three  months  from  the  date  of  these  presents; 
and  further  to  render  a  just  and  true  account  of  your  admin- 
istration in  the  premises,  to  our  said  County  Court,  within  one 
year  from  the  time  when  you  shall  receive  these  letters,  unless 

189 


otherwise  ordered  by  our  said  Court ;  to  render  all  such  further 
accounts  in  the  premises  as  shall  be  required  by  our  said  Court, 
and  to  observe,  obey  and  perform  all  such  orders  and  decrees 
as  shall  be  by  our  said  Court  lawfully  made  and  entered  in 
the  premises. 

In  testimony  whereof,  we  have  caused  the  seal  of  our  said 
County  Court  to  be  hereunto  affixed. 

Witness,   I.  W.  Webster,  Judge  of  our  said  Court,  at  the 
City  of  Kenosha  in  our  said  County  of  Kenosha  on  the  19th 
day  of  April  A.  D.,  1870. 
(L.  S.)  I-  W.  WEBSTER, 

County  Judge. 


STATE  OF  WISCONSIN,  KENOSHA  COUNTY  COURT 
IN  PROBATE. 

In  the  matter  of  the  Estate 

of 
Charles  Durkee,  deceased. 

At  a  regular  Term  of  the  County  Court  in  and  for  the 
County  of  Kenosha,  in  said  State,  at  the  County  Court  Room, 
in  the  City  of  Kenosha,  on  the  first  Tuesday  of  March, -1882, 
to  wit  March  21st  A.  D.  1882. 

Present :  The  Hon.  Edward  Martin,  County  Judge,  presiding. 

The  issue  heretofore  formed  under  the  order  of  this  court 
on  January  4-th,  A.  D.  1882,  to  try  the- validity  of  the  sale  and 
transfer  dated  May  23,  1871,  from  Caroline  Durkee  to  Harvey 
Durkee  of  certain  of  her  property  and  interests  part  of  the 
estate  of  the  late  Charles  Durkee  deceased  and  the  application 
of  Franklin  H.  Head,  executor  of  the  estate  of  Charles  Durkee, 

130 


deceased,  for  the  settlement  and  allowance  of  his  final  account 
and  the  assignment  of  the  residue  of  said  estate  to  such  other 
person  or  persons  as  may  be  by  law  entitled  thereto  coming 
on  to  be  heard  at  this  term  and  it  appearing  that  due  notice 
of  the  time  and  place  of  heafing  has  been  duly  given  as 
required  by  law  and  by  the  order  of  the  court  made  herein  on 
the  18th  day  of  August,  A.  D.  1881,  and  such  matters  having 
stood  continued  from  time  to  time  until  this  Term  and  Joseph 
Y.  Quarles,  Esq.,  now  appearing  of  counsel  for  the  said  execu- 
tor and  John  T.  Fitch  now  appearing  of  counsel  for  the  said 
Caroline  Durkee  and  Harvey  Durkee  now  appearing  in  his 
own  person  and  after  hearing  the  allegations,  proofs  of  the 
parties  and  all  the  evidence  and  upon  the  examination  of  the 
accounts  and  vouchers  of  said  executor  the  court  finds  that 
before  and  at  the  time  of  his  death  the  said  Charles  Durkee, 
deceased,  was  a  resident  of  the  City  and  County  of  Kenosha, 
in  the  State  of  Wisconsin,  that  he  departed  this  life  on  the 
14th  day  of  January  A.  D.  1870,  testate  as  to  part  of  his  estate 
'only  and  without  issue  leaving  the  said  Caroline  Durkee  his 
widow  relict  Heir  at  Law  &  next  of  Kin  him  surviving. 

That  By  the  Decree  of  the  Circuit  Court  of  Kenosha  County 
made  and  entered  on  the  23d  day  of  May,  1871,  it  was  (among 
other  things)  found  and  determined  that  the  bequest  by  the 
said  Charles  Durkee  deceased  to  the  Executors  named  in  his 
last  Will  and  Testament  of  his  real  and  personal  estate  in 
trust  for  the  uses  &  purposes  therein  set  forth  is  valid  &  effec- 
tual except  as  to  the  fifth  trust  apparently  sought  to  be  created 
by  said  Will  in  the  fifth  subdivision  thereof  which  trust  was 
thereby  adjudged  to  be  inoperative  &  void  and  it  was  also 
adjudged  that  the  estate  of  said  Charles  Durkee  deceased  by 
reason  of  the  invalidity  of  said  fifth  trust  or  subdivision 
descend  to  the  said  Caroline  Durkee  as  therein  mentioned 

131 


that  said  Franklin  H.  Head  is  the  sole  executor  of  the  last 
Will  and  Testament  of  said  Charles  Durkee  deceased.  That  on 
or  about  the  26th  day  of  May  A.  D.  1870  said  Harvey  Durkee 
who  was  named  in  said  will  of  said  Charles  Durkee  as  one  of 
the  executors  thereof  and  whe  had  qualified  as  such  Executor 
but  who  had  not  intermeddled  with  said  estate  as  such  executor 
except  to  execute  certain  instruments  as  a  mere  matter  of 
form  did  renounce  as  such  executor  and  resign  his  said  Trust 
and  was  on  said  26th  day  of  May  A.  D.  1870  duly  discharged 
by  the  order  of  this  Court  and  his  authority  as  such  executor 
was  then  &  there  extinguished. 

That  the  said  Caroline  Durkee  had  at  all  times  full  and 
complete  knowledge  of  the  condition  &  value  of  said  estate 
and  of  her  interest  therein  and  had  all  the  knowledge  and 
information  in  relation  to  said  matters  which  said  executor 
had  or  could  obtain. 

That  neither  the  said  executor  nor  the  said  Harvey  Durkee 
ever  used  of  made  any  fraudulent  devices  or  representations  to 
or  toward  said  Caroline  Durkee  or  any  concealment  whatever 
as  to  any  matter  or  any  shifts  or  devices  of  any  kind 

that  said  Caroline  Durkee  being  then  fully  informed  in  the 
premises  did  freely  voluntarily  and  at  her  own  instance  make 
the  sale  and  transfer  &  power  of  attorney  in  said  issue  men- 
tioned for  and  receive  therefor  a  full  and  adequate  considera- 
tion. 

That  thereupon  said  Harvey  Durkee  presented  said  deed 
from  said  Caroline  Durkee  to  said  Franklin  H.  Head  as  such 
Executor  as  aforesaid  and  that  he  said  Executor  acted  thereon 
in  good  faith  and  paid  all  amounts  therein,  named  which  came 
to  his  hands  to  said  Harvey  Durkee  and  took  his  acquittances 
therefor. 

That  said  Franklin  H.  Head  the  Executor  has  fully  admin- 
istered said  estate  of  said  Charles  Durkee  deceased  except  as 

133 


to  $250.00  which  he  now  holds  subject  to  the  order  of  this 
court. 

It  is  therefore  adjudged  decreed  and  declared  that  the 
said  Charles  Durkee  at  the  time  of  his  death  was  a  resident 
of  the  State  of  Wisconsin  and  that  the  said  Caroline  Durkee 
was  his  heir  at  law  and  as  such  was  entitled  to  all  the  residue 
of  his  estate  after  payment  of  the  Funeral  &  Testamentary 
expences  the  charges  of  the  last  sickness  &  the  legacies  men- 
tioned in  the  first  four  sections  of  his  said  Will. 

That  the  sale  and  transfer  from  said  Caroline  Durkee  to 
said  Harvey  Durkee  is  a  good  valid  and  subsisting  Deed. 

That  the  said  Caroline  Durkee  is  estopped  to  deny  the  valid- 
ity thereof  or  any  part  thereof  and  that  her  averment  that  such 
Deed  is  invalid  is  a  stale  claim  which  ought  not  now  to  be 
asserted  heard  or  allowed. 

That  the  said  Franklin  H.  Head  executor  as  aforesaid  has 
fully  administered  the  said  estate  of  said  Charles  Durkee 
deceased  and  has  fully  paid  and  discharged  all  the  Funeral 
and  Testamentary  expendes  and  the  charges  of  the  last  sick- 
ness and  the  bequests  and 'legacies  and  observed  all  the  direc- 
tions in  said  Will  contained  except  the  bequest  under  the  fifth 
clause  of  said  Will  which  was  so  decreed  by  the  Circuit  Court 
of  Kenosha  County  to  be  inoperative  as  aforesaid. 

That  he  has  sold  and  fully  accounted  for  and  paid  over 
according  to  the  Terms  of  said  Transfer  of  May  23c  1871  all 
the  proceeds  of  sale  of  the  20  acres  of  land  near  San  Diego 
California  therein  mentioned. 

That  the  amount  properly  chargeable  to  said  Ex- 
ecutor is  the  sum  of $56,947.00 

That  the  amount  properly  credited  to  him  is  the 

sum  of 56,697.00 


133 


Balance  due  from  him  to  the  Estate*  Subject  to 
charges    $250.00 

Wherefore  it  is  ordered  and  adjudged  that  the  Homestead 
of  said  Charles  Durkee  deceased  in  the  City  and  County  of 
Kenosha  in  the  State  of  Wisconsin  and  all  the  household  fur- 
niture &  personal  property  therein  be  and  the  same  is  hereby 
assigned  to  the  said  Caroline  Durkee  her  heirs  executors 
administrators  and  assigns  for  her  and  their  own  absolute  use 
and  benefit. 

That  all  the  other  property  rights,  credits  and  assets  belong- 
ing to  said  estate  which  are  not  included  in  said  Inventory 
filed  as  aforesaid  June  16"  A.  D.  1870  be  and  the  same  are 
hereby  assigned  to  the  said  Caroline  Durkee  her  executors 
administrators  &  assigns  for  her  and  their  own  absolute  benefit. 

That  the  said  Balance  or  sum  of  $250.00  be  and  the  same 
is  hereby  assigned  to  the  said  Harvey  Durkee  his  executors 
administrators  &  assigns  less  the  cost,  charges,  attorney  Fees, 
expences,  &  commissions,  for  the  settlement  of  this  estate 
except  such  as  already  charged  in  said  account  and  that  upon 
filing  his  receipt  therefor  or  for  the  balance  thereof  as  afore- 
said the  said  Franklin  H.  Head  Executor  as  aforesaid  stand 
discharged  from  his  trust. 
Dated  21st  March  A  D  1882 

By  the  Court 

EDWARD  MARTIN, 

County  Judge. 


KENOSHA  COUNTY  COURT.  IN  PROBATE. 

In  the  matter  of  the  last  will  and  testament  of  Charles  Durkee, 

Deceased. 


134 


Petition  for  Administration  De  Bonis  Non  Cum  Testamento 

Annexo. 

The  petition  of  Harriet  L.  Blaisdell  and  Caroline  C.  Johnson, 
respectfully  represents,  that  Charles  Durkee,  deceased,  de- 
parted this  life  on  the  14th  day  of  January,  A.  D.  1870,  in  the 
Territory  of  Utah,  being  at  said  time  a  legal  resident  of  the 
City  and  County  of  Kenosha,  in  the  State  of  Wisconsin.  That 
said  Charles  Durkee  died  testate  as  to  a  part  of  his  property 
only. 

That  thereafter  such  proceedings  were  had  in  the  County 
Court  of  Kenosha  County,  that  the  last  will  and  testament  of 
said  Charles  Durkee,  deceased,  was  duly  proved  and  admitted 
to  probate,  and  Harvey  Durkee  and  Franklin  H.  Head  therein 
'named  as  executors  and  trustees  were  duly  appointed  by  this 
Court  as  executors,  and  qualified  and  acted  as  such. 

That  thereafter  said  Harvey  Durkee  duly  resigned  his  trust 
as  such  executor  and  trustee,  which  resignation  was  accepted 
and  agreed  by  the  Court;  that  said  Franklin  H.  Head  pro- 
ceeded with  the  administration  of  said  estate,  and  such  pro- 
ceedings were  had ;  that  on  the  21st  day  of  March  A.  D.  1882, 
the  final  account  of  said  Franklin  H.  Head  as  executor,  was 
allowed,  and  he  was  discharged  from  his  trust.  That  said 
Franklin  H.  Head  is  not  now  a  resident  of  the  State  of  Wis- 
consin. 

Said  petitioners  further  represent  that  said  Charles  Durkee 
at  the  time  of  his  decease,  was  the  owner  of  real  estate  in  said 
territory  of  Utah,  and  other  places,  and  of  certain  personal 
property,  of  stocks  and  bonds  of  the  value  of  One  Thousand 
(1000)  Dollars,  and  upwards  to  an  amount  unknown  to  your 
petitioners.  That  said  lands,  stocks  and  bonds  did  not  come  to 
the  possession  of  the  executors,  and  have  never  been  admin- 
istered upon. 

135 


That  said  deceased  had  no  children,  but  left  him  surviving 
his  widow,  Caroline  Durkee,  who  is  since  deceased,  leaving 
her  surviving  as  her  sole  and  only  heir  at  law  one  sister, 
Angeline  Walker,  who  resides,  as  your  petitioners  are  informed 
and  believe,  in  the  City  of  New  York,  in  the  State  of  New 
York. 

That  said  Charles  Durkee  also  left  him  surviving  three 
brothers,  to-wit:  Harvey  Durkee,  Paoli  Durkee  and  Harrison 
Durkee,  and  the  children  of  a  deceased  brother,  Henry  Durkee, 
to-wit:  Caroline  C.  Johnson,  and  Harriet  L.  Blaisdell,  your 
petitioners.  Caroline  Johnson  residing  at  Fayette,  Ohio,  and 
Harriet  Blaisdell  residing  at  Champaign,  Illinois,  William  H. 
Durkee  who  is  since  deceased  without  issue,  and  John  Durkee 
also  deceased,  whose  heirs  are  unknown  to  your  petitioners, 
also  children  of  Susan  Bordman,  a  deceased  sister,  to-wit: 
George  W.  Bordman,  since  deceased,  whose  heirs  are  unknown 
to  your  petitioners,  Charles  L.  Bordman  and  Jessie  Monoghan. 

That  said  Harvey  Durkee,  Paoli  Durkee  and  Harrison  Dur- 
kee are  all  since  deceased. 

That  your  petitioners  are  unable  to  state  more  particularly 
the  heirs  of  said  deceased,  or  other  persons  interested,  and  are 
unable  to  inform  the  Court  as  to  whether  any  parties  interested 
in  said  estate  are  minors,  or  otherwise  incapable  of  prosecut- 
ing or  defending  for  her  or  himself,  or  is  under  guardianship. 

That  as  your  petitioners  are  informed  and  believe,  no  person 
interested  in  said  estate  now  reside  within  the  County  of 
Kenosha,  and  State  of  Wisconsin. 

Wherefore  your  petitioners  pray  that  administration  of  the 
estate  of  said  Charles  Durkee,  deceased,  not  already  adminis- 
tered, be  granted  to  Henry  J.  Hastings,  Public  Administrator 

136 


for  said  County  of  Kenosha,  State  of  Wisconsin,  with  the  will 
of  said  Charles  Durkee,  deceased,  hereto  annexed. 

Dated  at  Kenosha,  Wisconsin,  this  20th  day  of  September, 

A.  D.  1911. 

HARRIET  L.  BLAISDELI,. 
CAROLINE  C.  JOHNSON. 
By  JOHN  C.  S  TONER, 

Their  Attorney  in  fact. 


STATE  OF  WISCONSIN,  ) 

ss* 
Kenosha  County,        j 

John  C.  Stoner  being  first  duly  sworn  on  oath,  says  that  he 
is  a  resident  of  the  City  of  Washington,  in  the  District  of 
Columbia;  that  he  is  one  of  the  persons  named  as  donees  in 
the  power  of  attorney  executed  by  Caroline  Johnson  and  Har- 
riet Blaisdell  to  him  and  others ;  authorizing  him  to  appear  and 
act  for  them;  that  he  makes  this  petition  in  their  name,  and 
under  their  authority,  and  is  duly  authorized  thereto;  that  he 
has  heard  read  the  said  petition,  and  knows  the  contents 
thereof ;  and  that  the  same  is  true  to  his  own  knowledge,  except 
as  to  matters  therein  stated  upon  information  and  belief,  and 
as  to  such  matters,  he  believes  the  same  to  be  true.  That  his 
belief  is  based  upon  the  records  in  the  office  of  the  County 
Court  of  said  Kenosha  County,  and  the  files  in  the  estate  of 
Charles  Durkee  and  Caroline  Durkee,  deceased. 

JOHN  C.  STONER. 

Subscribed  and  sworn  to  before  me  this  20th  day  of  Septem- 
ber, A.  D.  1911. 

HENRY  J.  HASTINGS, 

Notary  Public, 
Kenosha  County,  Wisconsin. 

137 


KENOSHA  COUNTY  COURT.  IN  PROBATE. 

At  a  term  of  the  County  Court  held  in  probate  in  and  for 
the  County  of  Kenosha,  at  the  office  of  the  County  Court  in  the 
City  of  Kenosha,  and  State  of  Wisconsin,  on  the  22nd  day  of 
September,  A.  D.  1911,  at  10.00  o'clock  A.  M. 

Present  the  Hon.  George  W.  Taylor,  County  Judge. 
IN  THE  MATTER  OF  THE  LAST  Wiu,   ^ 

AND     TESTAMENT     OF     CHARLES     I  ORDER  FOR  HEARING. 

DURKEE,  DECEASED. 

On  reading  and  riling  the  petition  of  Harriet  L.  Blaisdell 
and  Caroline  C.  Johnson,  representing  among  other  things, 
that  Charles  Durkee,  late  of  the  City  of  Kenosha,  in  said 
County,  deceased,  on  the  14th  day  of  January,  A.  D.  1870,  in 
the  Territory  of  Utah,  died  testate  as  to  a  part  of  his  property 
only,  and  intestate  as  to  the  residue  thereof;  that  the  last  will 
and  testament  of  said  deceased  was  duly  proved  and  admitted 
to  probate  in  this  Court,  and  that  on  the  21st  day  of  March, 
A.  D.  1882,  the  final  account  of  Franklin  H.  Head,  Executor, 
was  allowed,  and  he  was  discharged  from  his  trust;  that  said 
Franklin  H.  Head  is  not  now  a  resident  of  the  State  of  Wis- 
consin; that  said  Charles  Durkee  at  the  time  of  his  decease 
was  the  owner  of  real  estate  in  said  territory  of  Utah  and 
other  places,  and  of  personal  property,  which  said  lands  and 
personal  property  did  not  come  to  the  possession  of  the  execu- 
tor, and  have  never  been  administered  upon;  that  said  Charles 
Durkee  left  no  widow  or  lineal  descendants ;  that  the  petitioners 
are  nieces  of  said  deceased,  the  children  of  a  deceased  brother, 
and  praying  that  administration  of  said  estate,  not  already 
administered,  with  the  will  annexed,  he  granted  to  Henry  J. 
Hastings,  Public  Adminitsrator  for  said  County  of  Kenosha. 

IT  IS  ORDERED, 

That  said  petition  be  heard  before  this  Court  at  a  special 

138 


term  thereof,  to  be  held  at  its  office  in  the  City  of  Kenosha,  in 
said  County,  on  the  4th  Tuesday,  being  the  24th  day  October, 
A.  D.  1911,  at  lO.Otf  o'clock  A.  M.  or  as  soon  thereafter  as 
counsel  can  be  heard. 

IT  IS  FURTHER  ORDERED,  that  notice  thereof  be  given 
to  the  heirs  of  said  deceased,  and  to  all  persons  interested,  by 
publishing  a  notice  of  this  order  for  three  successive  weeks 
prior  to  said  day  of  hearing,  in  the  Kenosha  Evening  News, 
a  daily  newspaper  published  in  the  City  of  Kenosha,  in  said 
County,  at  least  once  in  each  week. 

Dated  at  Kenosha,  Wisconsin,  this  22nd  day  of  September, 
A.  D.  1911. 

GEORGE  W.  TAYLOR, 

County  Judge. 

KENOSHA  COUNTY  COURT.    IN  PROBATE. 
STATE  OF  WISCONSIN,  ) 

M* 

Kenosha  County,        j 

At  a  County  Court  held  in  Probate  in  and  for  the  County  of 
Kenosha,  in  said  State,  at  the  office  of  the  County  Court,  in 
the  City  of  Kenosha,  on  the  19the  day  of  December  A.  D.  1911, 
at  ten  o'clock  A.  M. 

Present :  The  Hon.  Geo.  W.  Taylor,  County  Judge. 

In  the  Matter  of  the  Last  Will  and  Testament  of  Charles 
Durkee,  Deceased. 

Pursuant  to  an  order  of  this  Court  made  in  said  matter  on 
the  22nd  day  of  September  A.  D.  1911,  the  petition  of  Har- 
riet L.  Blaisdell  and  Caroline  C.  Johnson  was  this  day  heard 
and  considered;  and  on  reading  and  riling  the  affidavit  of 
Samuel  Simmons  showing  that  the  notice  required  to  be  given 

139 


by  said  order  has  been  duly  published  as  ordered,  and  it  appear- 
ing that  the  said  Charles  Durkee  Deceased  left  Real  and  per-* 
sonal  Estate  which  has  never  been  administered  upon,  and  his 
estate  was  closed  and  executors  discharged,  leaving  said  estate 
unsettled,  and  the  sole  surviving  executor  is  not  a  resident  of 
the  State  of  Winconsin  and  that  the  prayer  of  said  petitioner 
ought  to  be  granted,  and  the  Court  having  overruled  the  objec- 
tions of  J.  A.  Kuykendall  and  James  Cavanagh,  it  is  ordered 
that  the  said  Henry  J.  Hastings,  named  in  said  Petition  give 
bond  to  the  Judge  of  this  Court,  in  the  sum  of  Two  Thousand 
Dollars,  in  pursuance  of  the  statute  in  such  case  made  and 
provided,  and  that  letters  of  Administration  de  bonis  non  cum 
testamento  annexe  issue  accordingly. 

Dated  this  1.9th  day  of  December  A.  D.  1911. 

By  the  Court, 

GKO.  W.  TAYLOR, 

County  Judge. 

KENOSHA  COUNTY  COURT.   IN  PROBATE. 

STATE  OF  WISCONSIN,     } 
County   of  Kenosha.  J 

The  State  of  Wisconsin  to  all  to  whom  these  presents  shall 
come  and  especially  to  Henry  J.  Hastings,  of  the  said  County, 
Greeting : 

Know  ye  that,  whereas  Charles  Durkee,  late  of  the  City  of 
Kenosha,  in  said  County,  died  testate,  and  being  at  the  time  of 
his  death  a  legal  resident  of  said  County,  by  means  whereof 
the  proving  and  allowing  of  his  Last  Will  and  Testament,  and 
granting  Administration  of  all  and  singular,  the  goods,  chattels, 
rights,  credits  and  estate  whereof  he  died  possessed,  and  also 
auditing,  allowing  and  finally  discharging  the  account  thereof, 

140 


was  and  is  within  the  jurisdiction  of  our  county  court  of  said 
county;  and, 

Whereas,  the  Last  Will  and  Testament  of  the  said  Charles 
Durkee,  deceased,  was  approved,  allowed  and  admitted  to  pro- 
bate in  said  county  court,  and  said  estate  duly  administered 
therein,  and  the  accounts  of  the  executors  thereof  were  allowed 
and  they  were  discharged  from  their  trust,  and  the  sole  sur- 
viving executor  is  not  now  a  resident  of  this  State,  and  it 
appears  that  certain  assets  of  said  deceased  never  came  into 
the  hands  of  the  executors  of  his  Will,  and  have  never  been 
administered  upon,  and  Henry  J.  Hastings  being  duly  appointed 
as  Administrator  de  bonis  non  cum  testamento  annexo  has 
given  bond  as  such  Administrator  as  required  by  law,  which 
has  been  approved  and  filed  in  said  court ; 

We  therefore,  reposing  full  confidence  in  your  integrity  and 
ability,  have  granted  and  by  these  presents  do  grant  the  admin- 
istration of  all  and  singltiar  the  goods,  chattels,  rights,  credits 
and  estate  of  said  deceased  not  already  administered,  in  any 
way  concerning  his  said  Will,  unto  you,  the  said  Henry  J. 
Hastings  as  Administrator  aforesaid.  Hereby  authorizing  and 
empowering  you  to  take  and  have  possession  of  all  the  real  and 
personal  estate  of  said  deceased  not  already  administered,  and 
to  receive  the  rents,  issues  and  profits  thereof  until  said  estate 
shall  have  been  settled,  or  until  delivered  over  by  order  of  said 
court  to  the  devisees  or  heirs  of  said  deceased ;  and  to  demand, 
collect,  recover  and  receive  all  and  singular  the  debts,  claims, 
demands,  rights  and  choses  in  action  which  to  the  said  deceased 
while  living  and  at  the  time  of  his  death  did  belong. 

And  requiring  you  to  keep  in  good  tenantable  repair  all 
houses,  buildings  and  fences  on  said  real  estate  which  may  and 
shall  be  under  your  control ;  and  to  make  and  return  into  the 
said  County  Court,  within  three  months,  a  true  inventory  of 


I  11 


the  real  estate  and  of  all  the  goods,  chattels,  rights  and  credits 
of  said  deceased  which  shall  come  to  your  possession  and 
knowledge;  to  administer,  according  to  law,  and  the  will  of 
said  testator,  all  the  goods,  chattels,  rights,  credits  and  estate 
of  said  deceased  which  shall  at  any  time  come  to  your  posses- 
sion, or  to  the  possession  of  any  other  person  for  you,  and  out 
of  the  same  to  pay  and  discharge  all  debts,  legacies  and  charges 
chargeable  on  the  same,  or  such  dividends  thereon  as  shall  be 
ordered  and  adjudged  by  said  court;  to  render  a  just  and  true 
account  of  your  administration  to  said  court  within  one  year, 
and  at  any  other  time  when  required  by  said  court,  and  to  per- 
form all  orders  and  judgments  of  said  court  by  you  to  be  per- 
formed in  the  premises. 

IN  TESTIMONY  WHEREOF,  we  have  caused  the  seal 
of  our  said  County  Court  to  be  hereunto  affixed. 

WITNESS  the  Hon.  George  W.  Taylor,  Judge  of  said 
Court,  at  the  City  of  Kenosha,  in  said  County,  this  19th  day 
of  December,  A.  D.  1911. 

(SEAL)  GEO.  W.  TAYLOR, 

County  Judge. 

KENOSHA  COUNTY  COURT :  IN  PROBATE. 

IN  THE  MATTER  otf  THE  LAST  WILL  ^ 

AND    TESTAMENT    OF    CHARLES    ^PETITION. 
DURKEE,  DECEASED.  J 

The  petition  of  Henry  J.  Hastings,  of  said  county,  respect- 
fully represents  that  he  is  the  administrator  de  bonis  non  cum 
tcstamento  anne.ro  of  the  estate  of  Charles  Durkee,  deceased, 
duly  qualified  and  acting  as  such ;  that  he  knows  of  no  assets 
belonging  to  said  estate  except  from  information  derived  from 
J.  J.  Souder,  whose  affidavit  is  presented  herewith;  that  with- 

143 


out  the  assistance  of  Mr.  Souder  he  would  be  utterly  unable 
to  discover  any  assets  belonging  to  said  estate.  That  as  peti- 
tioner has  been  informed  and  believes  J.  A.  Kuykendall,  who 
has  been  appointed  by  the  courts  of  Utah  as  administrator  of 
said  estate,  has  expended  large  sums  of  money  and  many 
years  of  time  in  the  effort  to  collect  the  assets  of  said  estate, 
but  without  result.  That  he  believes  it  would  be  for  the  best 
interest  of  the  heirs  of  said  estate  to  enter  into  a  contract  with 
Mr.  Souder  for  the  discovery  and  collection  of  the  alleged 
claims  of  said  estate,  upon  some  equitable  basis. 

Your  petitioner  would  therefore  pray  that  this  court  enter 
its  order,  authorizing  and  empowering  your  petitioner,  as  ad- 
ministrator of  the  estate  of  said  deceased,  to  enter  into  a  con- 
tract with  Mr.  Souder  upon  some  equitable  basis ;  he  to  be  al- 
lowed a  contingent  fee  or  percentage  upon  all  monies  and  prop- 
erties which  he  may  be  able  to  collect ;  it  being  understood  that 
such  percentage  shall  cover  all  fees,  costs  and  expenses  and 
that  your  petitioner  and  the  estate  of  said  deceased  be  relieved 
from  any  and  all  liability  therefrom. 

Dated  at  Kenosha,  Wisconsin,  this  21st  day  of  December, 
A.  D.  1911. 

HENRY  J.  HASTINGS. 

STATE  OF  WISCONSIN,      \ 
County   of  Kenosha.  j 

Henry  J.  Hastings  being  first  duly  sworn  on  oath,  says  that 
he  is  the  Administrator  de  bonis  non  cum  testamento  annexo 
of  the  estate  of  said  Charles  Durkee,  deceased,  and  the  peti- 
tioner named  in  the  foregoing  petition;  that  he  has  read  said 
petition  and  knows  the  contents  thereof;  and  that  the  same  is 
true  to  his  own  knowledge  except  as  to  matters  therein  stated 


143 


upon  information  and  belief,  and  as  to  those  matters  he  be- 
lieves said  petition  to  be  true. 

HENRY  J.  HASTINGS. 

Subscribed  and  sworn  to  before  me  this  21st  day  of  De- 
cember, A.  D.  1911. 

JOSEPH  R.  CLARKSON, 

Notary  Public. 
Kenosha  County,  Wisconsin. 


KENOSHA  COUNTY  COURT :  IN  PROBATE. 

IN  THE  MATTER  OF  THE  LAST  WILL  ) 
AND  TESTAMENT  OF  CHARLES  ) 
DURKEE,  DECEASED.  ) 

At  a  regular  term  of  said  County  Court  for  Kenosha  County, 
State  of  Wisconsin,  held  at  the  Court  House  in  the  City  of 
Kenosha,  in  said  County,  beginning  on  the  first  Tuesday  of 
December,  A.  D.  1911,  and  on  the  23rd  day  of  December, 
A.  D.  1911,  during  said  term. 

Present  the  HON.  GEORGE  W.' TAYLOR, 

County  Judge,  Presiding. 

On  reading  and  filing  the  petition  of  Henry  J.  Hastings, 
Administrator  de  bonis  non  cum  testamento  annexe  of  the  es- 
tate of  Charles  Durkee,  formerly  of  the  City  of  Kenosha,  in 
said  county,  deceased,  and  the  accompanying  affidavit  of  Jacob 
J.  Souder,  from  which  it  appears  that  in  order  to  uncover  the 
assets  of  said  deceased,  consisting  of  claims  of  long  standing, 
and  of  very  doubtful  nature,  it  will  require  large  expense,  and 
the  employment  of  special  counsel  and  agents  in  different 
cities;  that  in  order  to  expedite  the  settlement  of  such  long 

144 


standing  claims,  and  avoid  extended  litigation  in  many  differ- 
ent courts,  it  may  become  necessary  or  advisable  to  make 
compromises  at  a  considerable  apparent  sacrifice ;  and  that 
said  Jacob  J.  Souder  has  undertaken  to  secure  the  employ- 
ment of  such  special  agents,  the  settlement  of  such  claims,  and 
the  discovery  of  such  assets,  saving  said  administrator  all  other 
expense  and  liability. 

IT  IS  ORDRED,  that  Henry  J.  Hastings,  administrator  as 
aforesaid,  be,  and  he  is  hereby  authorized  and  empowered  to 
compromise  any  claim  or  choses  in  action  which  may  come 
into  his  hands,  upon  the  best  basis  he  can  obtain,  at  no  greater 
loss  than  fifty  per  cent;  to  employ  such  counsel  or  special 
agents  as  he  may  find  necessary,  and  to  allow  such 
special  agents  or  counsel  to  retain  fifty  per  cent  of  such  face 
value,  if  paid  in  full ;  and  he  is  further  authorized  and  em- 
powered in  addition  thereto  to  allow  and  pay  to  said  Jacob  J. 
Souder  fifteen  per  cent  of  the  amount  of  such  claims  as  com- 
pensation for  his  services  and  expenses,  in  negotiating  settle- 
ments, and  securing  services  of  special  agents  and  counsel;  it 
being  understood  that  said  Jacob  J.  Souder  and  any  persons 
employed  by  him  shall  have  no  power  to  incur  any  expense 
which  shall  be  a  charge  against  said  administrator,  or  against 
said  estate,  other  than  such  contingent  fees. 
By  the  Court, 

.  W.  TAYLOR, 
County  Judge. 


145 


CHAPTER  7 


Treasury  Department,  Dec.  8,  1879. 
Hon.  Samuel  J.  Randall,  Speaker,  House  of  Representatives. 

Sir:  I  have  the  honor  to  call  attention  to  the  recommenda- 
tion made  to  Congress,  in  my  letter  of  Feb.  21,  1879  (copy  in- 
closed), upon  the  subject  of  the  investment  of  the  sinking 
fund  of  the  Union  and  Central  Pacific  Railroad  Companies,  as 
contemplated  in  the  Act  of  May  7,  1878  ('30  Stat.,  58),  and  to 
enclose  herewith  a  copy  of  a  letter  from  the  Treasurer  of  the 
United  States  of  the  6th  instant,  upon  the  same  subject. 

No  action  having  been  taken  by  Congress  toward  a  modifi- 
cation of  the  law,  in  pursuance  of  my  recommendation  of  last 
year,  I  have  again  to  recommend  the  enactment  of  a  statute 
which  will  give  the  Secretary  of  the  Treasury  authority  to  in- 
vest such  amounts  as  may  be  from  time  to  time  payable  to 
those  funds  in  the  first  mortgage  bonds  of  said  companies,  or 
in  any  interest-bearing  bonds  of  the  United  States. 

The  following  draft  of  a  joint  resolution  is  submitted  for 
the  consideration  and  action  of  Congress: 

JOINT  RESOLUTION  authorizing  the  Secretary  of  the  Treasury  to  invest  the 
smkmg  funds  of  the  Union  and  Central  Pacific  Railroad  Companies  in  any 
Lnited  States  bonds,  or  in  the  first-mortgage  bonds  of  said  companies. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives 
of  the  United  States  of  America  in  Congress  assembled,  That 
the  Secretary  of  the  Treasury  be,  and  he  is  hereby,  authorized 
to  invest  the  sinking  funds  established  under  the  third  section 
of  the  Act  of  May.  7,  1878,  entitled  "An  act  to  alter  and  amend 
the  act  entitled  'An  act  to  aid  in  the  construction  of  a  railroad 
and  telegraph  line  from  the  Missouri  River  to  the  Pacific 

1  Hi 


Reports  of  the 

Attorney"  General, 

Secretary"  of  Interior 

and 

Commissioner  of  Railways. 


Ocean,  and  to  secure  to  the  Government  the  use  of  the  same 
for  postal,  military,  and  other  purposes,'  approved  July  first, 
eighteen  hundred  and  sixty-two,  and  also  to  alter  and  amend 
the  Act  of  Congress  approved  July  second,  eighteen  hundred 
and  sixty-four,  in  amendment  of  said  first-named  act,"  in  any 
interest-bearing  bonds  of  the  United  States,  or,  respectively,  in 
the  first  mortgage  thirty-year  bonds  of  the  Union  Pacific  Rail- 
road Company,  and  of  the  Central  Pacific  Railroad  Company, 
authorized  by  section  10  of  the  Act  of  Congress  of  July  £, 
1864,  Chapter  216,  and  Section  1,  of  the  Act  of  Congress  of 
March  3,  1865,  Chapter  88. 
Very  respectfully, 

JOHN  SHERMAN, 

Secretary. 

\± 

Under  the  act  of  July  2,  186.4,  the  companies  were  author- 
ized to  issue  their  own  bonds  to  an  equal  amount,  which 
should  be  prior  lien  to  that  of  the  Government,  and  the  Union 
Pacific  Railroad  Company  accordingly  issued  its  bonds,  bear- 
ing interest  at  6  per  cent  per  annum,  as  follows : 


147 


TABLE  No.  8. — Statement  for  1895  showing  the  amount  of  bonds  issued  to  the  several  Pacific 
railroad  companies  and  to  whom  delivered,  with  the  dates  of  issue,  maturity,  beginning 
of  interest,  and  the  number  of  miles  aided. 

CENTRAL  PACIFIC  RAILROAD  COMPANY. 


i^ate  of  issue. 

Amount. 

Date  on 
which  inter- 
est begins. 

Date  of 
maturity. 

To  whom  delivered. 

Number 
of  miles 
aided. 

May     12,     1865.. 
Nov.    8,    1865..  . 

$1,258,000 
384,000 

Jan.      16,  1865 
Aug.     14,  1865 

Jan.    16,  1895 
...  .do  

Collis    P.    Huntington 
...  .do  

31 

Nov.    9,    1865... 

256,000 

Oct       16   1865 

do 

..do    ., 

Dec.    11,    1865..  . 

464,000 

Nov.     29   1865 

..    .do 

do  

23 

March    6,    1866.. 

640,000 

Mar.       6,  1866 

Jan.      1,  1896 

..do.  ., 

20 

July    10,    1866... 

640,000 

July      10   1866 

do 

do 

20 

Oct.    31,    1866 

320  000 

Oct       29   1866 

do 

do 

Jan.    15,    1867... 
Oct.    25,    1867... 
Dec.     12,     1867.. 

640,000 
320,000 
1,152,000 

Jan.       14,  1867 
Oct.      25,  1867 
Dec       11    1867 

Jan.      1,  1897 
....  do  
do 

....do  
....do  
.  ..do 

20 

June    10,   1868.  .  . 

946,000 

June,     9,  1868 

Jan.      1    1898 

do  

July    11,    1868... 
August    5,    1868. 

320,000 
640  000 

Jtfly     10,  1868; 
Aug        4   1868 

....  do  ... 
do 

....do  

do 

20 

August   14,   1868. 

1,184,000 

Aug      13   1868 

do 

do  

20 

Sept.    12,    1868.. 
Sept.    21,    1868.. 
Oct.    13,    1868... 

1,280,000 
1,120,000 
1,280,000 

Sept.     11,  1868 
Sept.     19,  1868 
Oct        12    1868 

....do  
....do  
do 

....do  
....do  
do  

37 
40 
35 

Oct     28,     1868... 
Nov.     5,    1868  .  .  . 
Nov.    12,   1868.  . 

640,000 
640,000 
640  000 

Oct.      26,  1868 
Nov.       3,  1868 
Nov      11   1868 

....do  
....do  
do 

....do  
....do  
do  

40 
20 
20 

Dec.     5,     1868.  .  . 

640  000 

Dec        5   1868 

do 

do  

20 

Dec.     7,     1868... 
Dec.    30,    1868  .  .  . 

640,000 
640,000 

Dec.       7,  1868 
Dec.      29,  1868 

....do  
do  .  . 

....do  
....do  

20 
20 

Jan.      2,    1872.  .  . 

4  120 

Nov      28   1868 

do 

do  

20 

Jan.    15,    1869... 
Jan.    29,    1869... 

640,000 
640,000 

Jan.      13,  1869 
Jan.      28,  1869 

Jan.      1,  1899 
....  do 

....do  
....do  

20 
20 

Feb.    17,    1869.  .  . 

640  000 

Feb       17  1869 

do 

do  

20 

March    2,    1869.  . 
Do    

May     28,     1869.. 

1,066,000 
1,333,000 
1,786,000 

do  
Mar.       2,  1869 
May     27,  1869 

....do  
....do  
do  . 

....do  
....do  
....do  

20 
20 
20 

July     15,     1869.. 
July     16,     1869.. 
Dec.     31,     1869.. 

1,314,000 
268,000 
1,510,000 

do  
July      15,  1869 
July      16,  1869 

....do  
....do  
do. 

....do  
....do  
....do  

100 
20.30 
47  20 

Total     

25,885,120 

737/50 

148 


UNION  PACIFIC  RAILROAD  COMPANY. 


Feb     1     1866 

$640,000 

Feb.       1,  1866 

Feb.      1,  1896 

T.    C.   Durant  

40 

May    7     1866 

400,000 

May       7,  1866 

do  

B.    F.    Bunker  

25 

June    26,    1866.. 
July     13      1866 

640,000 
320,000 

June     26,  1866 
July      13,  1866 

do  
..  .do  

....do  
.do 

40 
20 

\ugust    9,    1866. 

560,000 

Aug.       9,  1866 

do  

do  

35 

Sept.    11,    1866.. 
Oct.    15,    1866... 
Nov.     8,     1866... 

720,000 
560,000 
480,000 

Sept.     11,  1866 
Oct.       13,  1866 
Nov.       7,  1866 

do  
do  
do  

....do  
A.    G.    L,athrop  
...  .do  

45 
35 
30 

Jan.     9,     1867... 

560,000 

Jan.        8,  1867 

Jan.      1,  1897 

B.    F.    Bunker.  .. 

35 

fune   11,   1867.  .  . 

640,000 

une     10,  1867 

....do... 

do 

40 

July    6,    1867  
August  21     1867 

640,000 
560,000 

uly        6,  1867 
Aug.      29   1867 

....do  
..  .do  

....do  

do 

40 
35 

Oct.     2,     1867... 

£60,000 

Oct.         2,  1867 

do  

....  do  

35 

Nov.     5,    1867  .  .  . 
Dec.    13     1867... 

560,000 
320,000 

Isov.       5,1867 
Dec.    13     1867 

....do  
do  

....do  
E.    H     Rollins 

35 
20 

Jan.    28,    1868... 

957,000 

Jan.      27,  1868 

Jan.      1,  1898 

do  

30 

May    18     1868 

960,000 

May    16     1868 

....  do  

do 

20 

May    19,    1868.  .  . 

960,000 

May     18   1868 

..  .do.  .. 

do 

20 

June     12,     1868.. 
June    17,    1868.. 
July    23,    1868..  . 
July    25,    1868.,. 

960,000 
960,000 
960,000 
1,941,000 

June     12,  1868 
June     18,  1868 
July      22,  1868 
July      24   1868 

....do  
....do  
....do  
..  .do  

....do  
.  ...do  
.  ...do  
do 

20 
20 
20 
40 

August   12,   1868. 
August  29,   1868. 
Sept.       7,    1868.. 
Sept.    23,    1868.. 

640,000 
640,000 
1,280,000 
640,000 

nug.     11,  1868 
Aug.      28,  1868 
Sept.       7,  1868 
Sept.     23,  1868 

....do  
....do  
....do  
do  

....do  
....do  
....do  
do 

20 
20 
40 
20 

Oct.    22,    1868... 

640,000 

Oct.       21,  1868 

..  .do... 

do 

20 

Nov.   20,   1868... 
Dec-       7,     1868.. 

640,000 
1,280,000 

Nov.     19,  1868 
Dec.       7,  1868 

....do  
do  

....do  
do 

20 
40 

Dec.    15,    1868... 
Dec.    17,    1868.  .. 
Dec.    24,    1868... 

640,000 
640,000 
640,000 

Dec.      14,  1868 
Dec.      16,  1868 
Dec.     23,  1868 

....do  
....do  
do  

....do  
....do  
do 

20 
20 
20 

Do 

640,000 

Dec       24   1868 

do 

do 

July    15,    1870... 

1,512 

Nov.     21,'  1868 

.  .     do 

J.   M.   S    Williams 

20 

Jan.    29,    1869... 
Feb.    10,    1869... 
July    22,    1869... 

640,000 
1,280,000 
640,000 

Jan.      29,  1869 
Feb.      10,  1869 
July      16,  1869 

Jan.      1,  1899 
do  
do.  .. 

John     J.     Cisco  
Union   Pacific  R.R.Co. 
Jno.   M.   S.   Williams 

20 
40 

Nov.    10,   1869... 
July    14,    1870... 

437,000| 
160,000] 

do  
do  

do  
....do  

E.  H.  Rollins,$114,000 
J.M.S.Willi's,$323,000 
J..   M.    S.    Williams.. 

•0 

13.68 
5 

Total    

27,236,512 

1,038.68 

149 


TABLE  No.  8. — Statement  for  189$  showing  the  amount  of  bonds  issued  to  the  several  Pacific 
road  companies  and  to  whom  delivered,  etc. — Continued. 

KANSAS    PACIFIC    RAILWAY    COMPANY,    LATE    UNION    PACIFIC    RAILWAY 
COMPANY,  EASTERN  DIVISION. 


Date  of  issue. 

Amount. 

Date  on 
which  inter- 

Date  of 

To    whom   delivered. 

of  miles 
aided 

maturity. 

N       b 

Nov     1,    1865... 

$640,000 

Nov.     I,  1865 

Nov.     1,  1895 

John   D.   Perry.  . 

40 

Jan      1      1866 

352,000 

Jan.      1,  1866 

Jan.      1,  1896 

W.   J.    Palmer 

22 

May     8      1866 

368,000 

May      8,  1866 

....  do  

.  .do.  .  , 

23 

July     9,     1866... 
Oct     16     1866 

320,000 
400  000 

July      9,  1866 
Oct.     15,  1866 

....do  
do. 

....do  

do  ... 

20 
25 

Jan     23     1867 

400,000 

Jan.    23,  1867 

Jan.      1,  1897 

do  

25 

May     6,     1867... 
June   11,   1867... 
Aug    13     1867 

480,000 
400,000 
384,000 

May      6,  1867 
June  10,  1867 
Aug.   13,  1867 

.  .  .  .do  
....do  
do  

J.   C.   Reiff  
Josiah   C.   Reiff  
J.   C.   Reiff  

30 
25 
24 

Sept    20    1867 

400  000 

Sept    20  1867 

do 

25 

Oct     26  '  1867 

416  000 

Oct.    26,  1867 

.  .  .do 

do     .      . 

26 

Dec.     3,'    1867!  .  . 

320,000 

Dec.      3,  1867 

....do.  

do  

20 

Jan     14     1868 

480,000 

Jan.     14,  1868 

Jan.      1,  1898 

do 

30 

April  28'  1868... 
June    6,    1868.  .  . 

400,000 
320,000 

April  28,1868 
June     6,  1868 

..  .do  
....do  

....do  
do  

25 
20 

Nov.    5,    1868... 

223,000 

Nov.     2,  1868 

...do  

....do  

13.9425 

Total    

6,303,000 

393.9425 

CENTRAL  BRANCH  UNION  PACIFIC  RAILROAD  COMPANY,  LATE  ATCHISON 
AND  PIKES  PEAK  RAILROAD  COMPANY,  ASSIGNEES  OF  THE  HANNIBAL 
AND  ST.  JOSEPH  RAILROAD  COMPANY. 


July  27,  1866. 
Dec.  7,  1866. 

$320,000 
320,000 

July  19,  1866 
Dec.   6,  1866 

Jan.   1,  1896 
...  do  

S.  C.  Pomeroy  
E.  H.  Nichols  

20 
20 

May  2,  1867. 

320,000 

May   2,  1867 

Jan.   1,  1897 

....do  

20 

Dec.  4,  1867. 

332,000 

Dec.   3,  1867 

...do  

....do  

20 

Jan.  21,  1868. 

320,000 

Jan.  20,  1868 

Jan.   1,1898 

....do  

20 

Total  

1,600,000 





- 

100 

SIOUX  CITY  AND  PACIFIC  RAILROAD  COMPANY. 


March    16,    1868. 
March    30     1868 

$792,000 
320,000 

Mar.  10,  1868 
Mar.  30,  1868 

Jan.      1,  1898 
.  .  .do.  .  , 

J.   I.    Blair  

.  .  .  .do.  .  .  . 

49.50 
20 

March      3,    1869. 

516,320 

Mar.  3,  1869 

....do  

....do  

32.27 

Total     

1,628,320 

101.77 

WESTERN   PACIFIC  RAILROAD   COMPANY. 


Jan.  24,  1867... 
Sept.  3,  -869... 
Oct.  29,  1869... 
Tan  27  1870 

$320,000 
320,000 
1,008,000 
322  000 

Jan.  26,  1867 
Sept.  3,  1869 
Oct.  28,  1869 
Jan  22  1870 

Jan.      1,  1897 
Jan.      1,  1899 
.  .  .do  

John  A.  Griswold.  .  .  . 
C.  P.  Huntington  .  .  . 
Jas.  H.  Storrs,  att'y- 

20 
60 
63 

Jan  8  1872 

560 

...  do  

.  .  .  .do  

20  18 

Total    

1,970,560 

128.18 

RECAPITULATION. 


Name  of  road.                               | 

Amount  of 
bonds. 

$25,885,120.00 

Interest  to 
maturity  at  6 
per  cent.       | 

$45,786,454.67 

Total. 
$71,671  574  67 

27,236,512.00 

48,115,835  85 

75  352  347  85 

Union       ac       .  . 

6,303,000.00 

11,188,943.09 

17  491  943  09 

1,600,000.00 

2,826  608  26 

4  426  608  26 

1,628,320.00 

2,880,935  89 

4  509  255  89 

1,970,560.00 

3,426,469.74 

5  433  029  74 

Aecrreeate     .             

64,623,512.00 

114,261,247.50 

178,884,759.50 

150 


Under  the  Act  of  July  2,  1864,  the  companies  were  author- 
ized to  issue  their  own  bonds  to  an  equal  amount,  which 
should  be  a  prior  lien  to  that  of  thfe  Government,  and  the 
Union  Pacific  Railroad  Company  accordingly  issued  its  bonds 
bearing  interest  at  6  per  cent  per  annum,  as  follows : 


Date  of  issue. 

Amount. 

Date  of  maturity. 

$6,475,000 

January  1,  1896. 

1,598,000 

January  1,  1897. 

1,920,000 

Julyl,  1897. 

5,999,000 

January  1,  1898. 

8,837,000 

July  1,  1898. 

anuary    1      1  S69                 

2,400,000 

January  1,  1899. 

Total     .                                                

27,229,000 

The  Kansas  Pacific  Railway  (now  the  Kansas  Division  of 
the  Union  Pacific  Railway  Company)  was  first  chartered  as 
the  Leavenworth,  Pawnee,  and  Western.  The  name  of  the 
company  was  changed  on  June  6,  1863,  to  Union  Pacific  Rail- 
way Company,  Eastern  Division,  and  later  to  Kansas  Pacific 
Railway  Company.  Under  the  act  of  1862  United  States 
bonds  bearing  6  per  cent  interest  were  issued  to  aid  in  its  con- 
struction as  follows: 


Date  of  issue. 

Amount. 

Date  on 
which  inter- 
est begins. 

Date  of 
maturity. 

To  whom  delivered. 

Number 
of  miles 
aided. 

Nov.    1,    1865.    . 
Jan.     1,     1866.    . 
May     8,     1866.    . 
July     9,     1866.    . 
Oct.    16,    1866.    . 
Jan.    23,    1867.    . 
May     6,     1867.    . 

$640,000 
352,000 
368,000 
320,000 
400,000 
400,000 
480,000 

Nov.     1,  1865 
Jan.      1,  1866 
May      8,  1866 
July      9,  1866 
Oct.    15,  1866 
Jan.    23,  1867 
May      6   1867 

Nov.     1,  1895 
Jan.      1,  1896 
.  .  .  .do  
....do  
....do  
Jan.      1,  1897 
do 

Jno.  D.  Perry  
Wm.  J.  Palmer  
.  .  .  .do  
....do  
....do  
....do  
J  C.  Reiff 

40 
22 
23 
20 
25 
25 
30 

June   11,   1867.    . 
Aug.    13,    1867.    . 

400,000 
384,000 

June   10,  1867 
Aug.    13,  1867 

....do  
do 

Josiah  C.  Reiff  
J.  C  Reiff  

25 
24 

Sept.  20,  1867.    . 
Oct.    26,    1867.    . 
Dec.     3,     1867.    . 
Jan.    14,    1868.    . 
April  28,  1868.    . 
June    6,    1868.    . 
Nov.     5,    1868.    . 

400,000 
416,000 
320,000 
480,000 
400,000 
320,000 
223,000 

Sept.  20,  1867 
Oct.    26,  1867 
Dec.      3,  1867 
Jan.     14,  1868 
April  28,  1868 
June     6,  1868 
Nov.     2,  1868 

....do  
....do  
....do  
Jan.      1,  1898 
.  .  .  .do  
....do  
....do  

...  do  
....do  
....do  
....do  
....do  
....do  
....do  

25       • 
26 
20 
30 
25 
20 
13.9425 

Total    

6,303,000 

393.9425 

151 


Class. 

• 

Trustees. 

Interest  payable 

Issued  anc 
outstand- 
ing. 

Owned  by 
the    com- 
pany   and 
held  by 
trustees. 

Afloat. 

Jan  and  July 

$27,229,000 

$27  229  000 

and       F.       Gordon 
Dexter. 
Union    Trust    Co     of 

o8,000 

aS  000 

New   York. 
.    .   do 

Mar.    and    Sept 

4,721,000 

4  721  000 

bonds. 

do 

do. 

455,000 

455  000 

tered  bonds. 
Omaha-bridge    bonds. 

J.    Pierpont    Morgan, 
and    Edwin    F.    Atk 
Frederick   I/.  Ames, 
and    Edwin    F.    At- 
kins. 
Union    Trust    Co     of 

April    and    Oct. 
Jan.  and  July 

732,000 
3,775,000 

&$4,000 

728,000 
3  775  000 

per    cent    bonds. 

KANSAS     PACIFIC    R.     R. 
CO. 

New    York. 
H     M     Alexander 

2,240,000 

c2  240  000 

bonds. 

June    and    Dec 

4,063,000 

c4  063  000 

bonds. 

May  and   Nov 

5,887,000 

c5  887  000 

bonds. 

Leavenworth    Branch 
bonds. 

Wm.      Endicott,     and 
August    Rutten. 
H.    M.    Alexander. 

....do  
do 

600,000 
11,720,000 

d585,000 

15,000 

f  1  1  720  ftOA 

Consolidated-mortgage 
bonds. 
Income  bonds. 

George    Gould.  e 
American     Loan    and 
Trust    Co.,    Boston. 
do  

Mar.    and    Sept. 
....do  

263,700 
4,011,650 

02,242,450 
7*3,997,100 

21,250 
14  550 

(subordinated.) 
Cheyenne  Branch 
bonds. 

Russell       Sage       and 
George    J.    Gould.e 

May  and   Nov. 
do  

975,000 
385 

t971,000 

4,000 

00  e 

coupon    certificates. 

UNION     PACIFIC     R.     R. 
CO. 

do 

..  .do  

18,000 

18  000 

bonds. 
Omaha       bridge       re- 
newal   bonds. 
Equipment       Trust 
bonds,    series    A. 

Central      Trust      Co., 
New   York. 
American     Loan     and 
Trust    Co.,    Boston. 
jn 

April    and    Oct. 
...do  
do 

889,000 
358,000 
1,263,000 

j'300,000 

589,000 
358,000 
1  Ofi3  000 

Equipment      Trust 
bonds,  series  B. 

do 

..  .do.  .. 

671,000 

fr671,000 

Equipment      Trust 
bonds,   series  C. 

Mercantile    Trust  Co  , 

May   and   Nov. 

5,000,000 

£5,000,000 

collateral    mortgage 
bonds. 

New  York. 

..  .do 

2,037,000 

62,037  000 

1  800  000 

Collateral    Trust    4J^ 
per    cent    bonds. 
Collateral      Trust      6 
per  cent  notes. 

Co.;   Boston. 
Drexel,      Morgan      & 
Co.,    New    York. 

Feb.    and   Aug. 

15,976,000 

t'183,000 

15,973,000 

Total     

97,682,735 

12,190,550 

85,492,185 

152 


a  These  bonds  were  due  April  1,  1889,  but  have  not  yet  been  presented  for  redemption. 

b  Owned  by  the  company,  and  held  by  the  trustees  under  the  trust  indenture  of  September  4,  1891, 
as  part  security  for  the  collateral  trust  6  per  cent  notes. 

c  Of  these  amounts  $304,000  in  Eastern  Division  bonds,  $347,000  in  Middle  Division  bonds,  and 
$1,651,000  in  Denver  Extension  bonds  on  which  the  Union  Pacific  Railway  Company  pays  interest, 
are  held  as  investments  in  the  Kansas  Pacific  Denver  Extension  fund. 

d  $582,000  of  these  bonds  are  held  by  trustees  under  the  Kansas  Pacific  consolidated' mortgage, 
the  balance,  or  $3,000,  being  owned  by  the  company  and  in  the  hands  of  the  treasurer. 

e  Appointed  since  the  close  of  the  year  to  fill  the  vacancy  caused  by  the  death  of  Jay  Gould 

/  The  American  Loan  and  Trust  Company,  trustee,  under  the  Kansas  Pacific  Further  Security 
Sinking  Fund,  holds  116,000  of  these  bonds. 

g  $241,200  of  these  bonds  are  by  the  trustees  under  the  Kansas  Pacific  consolidated  mortgage. 
The  balance,  or  $1,250,  are  owned  by  the  company  and  held  by  the  trustees  under  the  trust  inden- 
ture of  September  4,  1891,  as  part  security  for  the  collateral  trust  6  per  cent  notes. 

h  $3,992,650,  of  these  bonds  are  held  by  the  company  and  in  the  hands  of  the  Treasurer. 

i  Held  by  the  trustees  under  he  Kansas  Pacific  consolidated  mortgage. 

j  These  bonds  are  owned  by  the  company,  $145,000  being  held  by  the  trustees  under  the  trust 
indenture  of  September  4,  1891,  and  $155,000  being  in  the  hands  of  the  treasurer. 

•  The  Central  Pacific  was  originally  chartered  as  the  Central 
Pacific  Railroad  Company  of  California  in  1861,  and  under 
the  acts  of  1862  and  1864  was  authorized  to  construct  a  line 
of  road  from  the  Pacific  Coast,  at  or  near  San  Francisco,  or 
the  navigable  waters  of  the  Sacramento  River,  and  to  extend 
it  eastward  to  a  connection  with  the  Union  Pacific.  Bonds 
bearing  (>  per  cent  interest  were  issued  to  aid  in  its  construc- 
tion, as  follows: 


Date  of  issue. 

Amount. 

Date  on 
which    inter- 
est begins. 

Date  of       To 
maturity. 

whom     delivered. 

Number 
of  miles 
aided. 

May    12,   1865..  . 
Nov.      8,   1865.  .  . 
Nov.      9,   1865.  .  . 

$1,258,000 
384,000 
256,000 

Jan.    16,  1865 
Aug.  14,  1865 
Oct.    16,  1865 

Jan.    16,1895... 
do  
do 

.do  
.do  :  
do 

30 
23 

Dec.    11,  1865.  .. 

464,000 

Nov.   29,  1865 

....do  

.do  

Mar.      6,    1866..  . 

640,000 

Mar.     6,  1866 

Jan.      1,  1896.  .  . 

.do  

20 

July    10,   1866.  .  . 

640,000 

July    10,  1866 

.  .  .  .do 

do 

20 

Oct.     31,   1866.  .  . 

320,000 

Oct.    29,  1866 

do  

.do 

Jan.     15,  1867..  . 

640,000 

Jan.    14,  1867 

Jan.      1,  1897.  .  . 

.do.  .. 

Oct.     25,   1867.  .  . 

320,000 

Oct.    25,  1867 

.  .  .  .do.  . 

do 

24 

Dec.    12,  1867..  . 
June    10,   1868..  . 

1,152,000 
946,000 

Dec.    11,  1867 
June     9,  1868 

....do  
....do  

.do  
.do.  .. 

20 

July    11,   1868.  .  . 
Aug.      5,   1868..  . 
Aug.    14,   1868.  .  . 

320,000 
640,000 
1,184,000 

July    10,  1968 
Aug.     4,  1868 
Aug.   13,  1868 

....do  
....do  
do 

.do  
.do  
do 

.  20 
37 
40 

Sept.  12,  1868..  . 
Sept.  21,  1868..  . 
Oct.     13,   1868..  . 

1,280,000 
1,120,000 
1,280,000 

Sept.  11,  1868 
Sept.  19,  1868 
Oct.     12,  1868 

....do  
....do  
do.  . 

.do  
.do  
.do 

35 

40 
20 

Oct.     28,   1868.  .. 
Nov.      5,   1868..  . 
Nov.    12,   1868..  . 
Dec.      5,  1868..  . 

640,000 
640,000 
640,000 
640,000 

Oct.    26,  1868 
Nov.     3,  1868 
Nov.   11,  1868 
Dec.     5,  1868 

....do  
....do  
....do  
....do  

.do  
.do  
.do  
.do.  .. 

20 
20 
20 
20 

Dec.      7,  1868..  . 
Dec.    30,   1868.  .  . 
Jan.       2,   1872..  . 
Jan.     15,  1869..  . 
Jan.     29,   1869..  . 
Feb.    17,  1869..  . 
Mar.       2,  -868..  . 
....do    
May    28,  1869..  . 

640,000 
640,000 
4,120 
640,000 
640,000 
640,000 
1,066,000 
1,333,000 
1,786,000 

Dec.      7,  1868 
Dec.    29,  1868 
Nov.  28,  1868 
Jan.    13,  1969 
Jan.    28,  1869 
Feb.     17,  1869 
....do  ,. 
Mar.     2,  1869 
May    27,  1869 

....do  
....do  

....do  :.. 

Jan.      1,1899... 
.  .  .  .do  
....do  
....do  
....do  
....do  

.do  
.do..  

.do.:  

.do  
.do  
.do  '. 
.do  
.do  
.do... 

20 

20 
20 
20 
20 
20 
20 

July    15,  1869..  . 
July    16,  1869..  . 
Dec.    31,  1869... 

1,314,000 
268,000 
1,510,000 

do  
July    15,  1869 
July    16,  1869 

....do  
....do  
do  

.do  
.do  
.do  

100 
20.30 
47.20 

Total    

25,885,120 

...737.50 

153 


The  Central  Pacific  Railroad  Company  of  California  on  Oc- 
tober 31,  1864,  sold  and  assigned  its  rights  to  the  Western  Pa- 
cific Railroad  Company,  so  far  as  such  related  to  the  construc- 
tion of  a  road  between  San  Jose  and  Sacramento,  Cal.,  which 
assignment  was  ratified  and  confirmed  by  act  of  Congress  ap- 
proved March  3,  1865,  and  bonds  bearing  6  per  cent  interest 
were  issued  by  the  United  States  to  that  company  as  follows : 


Date  of  issue. 

Amount. 

Date  on 
which    inter- 
est begins. 

Date  of 
maturity. 

To     whom     delivered. 

Number 
of  miles 
aided. 

Jan.     24,   1867.    .  . 
Sept.     3,  1869.    .  . 
Oct      29    1869 

$320,000 
320,000 
1  008  000 

Jan.    26,  1867 
Sept.     3,  1869 
Oct     28   1869 

Jan.      1,  1897 
Jan.      1,  1899 
...  .do  

Jas.     A.     Griswold.  .  . 
C.    P.    Huntington  .  .  . 
Jas    H    Storrs    Att'y 

20 
60 
63 

Tan      27    1870 

322  000 

Jan     22   1870 

C     P     Huntington 

20  18 

Jan        2*   1872* 

560 

.     do 

do 

Total    

1,970,560 

123.18 

Under  the  act  of  July  2,  1864,  these  companies  issued,  re- 
spectively, their  first  mortgage  6  per  cent  bonds,  constituting 
a  prior  lien  to  that  of  the  United  States,  as  follows : 


Description  of  bonds. 

Date  of  issue. 

Date  of 
maturity. 

Amount. 

Central 

Pacific     series    A              

July      1   1865 

July      1   1895 

$2  995  000 

B  

July      1,  1866 

July      1   1896 

1  000  000 

C  
D 

.  .  .  .do  
.  do 

do  
do 

1,000,000 
1  383  000 

E  

Jan.      1,  1867 

Jan       1    1897 

3  997  000 

F... 

Jan.      1,  1868 

Jan       1   1898 

3  999  000 

G  
H.. 

.  .  .do  
,.  .do 

do  
do 

3,999,000 
3  999  000 

I  

..  .do    . 

do 

3  511  000 

Total 

25  883  000 

Western 

Pacific,    old    issue  

Dec.      1   1865 

Dec       1    1896 

112  000 

series  A   .    . 

July      1   1869 

July      1   1899 

1  858  000 

Total 

1  970  000 

Since  my  last -report  $2,995,000  Central  Pacific  first  mort- 
gage bonds,  series  A,  maturing  July  1,  1895,  were  extended 


154 


for  two  and  one-half  years  and  the  interest  reduced  to  5  per 
cent.  Similar  arrangements  have  been  made  for  the  extension 
of  series  B,  C,  and  D,  so  that  all  shall  mature  on  the  same  date, 
January  1,  1898.  The  old  issue  of  Western  Pacific  bonds,  ma- 
turing December  1,  1895,  have  been  taken  up  by  the  issue  of 
first  mortgage  bonds,  series  A. 

On  June  23,  1870,  the  Central  Pacific  Railroad  Company  of 
California  and  the  Western  Pacific  Railroad  Company  were 
consolidated,  under  the  name  of  the  Central  Pacific  Railroad 
Company,  and  this  consolidated  company  is  subject  to  the 
terms  of  the.  Thurman  Act  (May  7,  1878).  The  balance  of 
debt  to  the  United  States,  on  June  30,  1896,  was  as  follows : 
Principal  of  bonds  issued  $27,855,680 ;  excess  of  interest  paid 
by  the  United  States  over  all  credits,  $30,426,329.42;  total 
debt,  $58,282,009.42. 

CONDITION  OF  THE  BOND  AND  INTEREST 
ACCOUNT. 

The  public  debt  statement  issued  by  the  Treasury  Depart- 
ment June  20,  1884,  shows  the  condition  of  the  accounts  with 
the  several  Pacific  railroad  companies  as  to  moneys  actually 
covered  in  to  their  credit,  but  takes  no  account  of  moneys  in 
the  sinking  fund  held  by  the  Treasurer  of  the  United  States, 
or  of  the  compensation  for  services  not  at  that  time  settled  by 
the  accounting  officers,  as  shown  by  the  following : 


Name  of  railway. 

Principal 
outstanding. 

Interest  ac- 
crued and 
not  yet  paid, 
by  the 
United 
States. 

Interest    repaid    by    com- 
panies     to      credit      of 
bond    and    interest    ac- 
count. 

By  cash 
payments, 
5  per  cent, 
of  net 
earnings. 

Balance  of 
interest 
paid  by 
the  United 
States. 

Interest 
paid  by  the 
United 
States. 

By  transpor- 
tation serv- 
ices. 

Central    Pacific.. 
Western     Pacific  . 
Union    Pacific  .  .  . 
Kansas    Pacific.  . 
Central   Br'h   U.P 
Sioux  C'y&Pacifi 

$25,885,120.00 
1,970,560.00 
27,236,512.  OC 
6,303,000.00 
1,600,000.  OC 
:       1,628,320.  OC 

$776,553.60 
59,116.80 
817,095.36 
189,090.00 
48,000.00 
48,849.60 

$24,229,108.87 
1,727,365.74 
25,774  945.77 
6,318,423.09 
1,597,808.26 
1,513,147.09 

$4,784,617.43 
9,367.00 
10,006,107.79 
3,055,291.60 
162,401.27 
131,138.32 


$648,271.96 

$18,796,219.48 
1,717,998.74 
15,768,837.98 
3,263,131.49 
1,428,480.08 
1,382,008.77 

6,92!6.9i 

— 

Total 


64,623,512.0011,938,705.361   61,160,798. 82118,148,923. 41|   655,198.87     41,356,676.54 


155 


The  "interest  accrued  and  not  yet  paid  by  the  United 
States,"  amounting  to  $1,938,705.36,  was  payable  July  1,  1884. 

The  total  indebtedness  of  the  several  subsidized  Pacific  rail- 
roads to  the  United  States  on  June  30,  1884,  is  as  follows : 


TOTAL   DEBT. 

Union   Pacific    (including  Kansas   Pacific) : 

Principal $33,539,512.00 

Accrued    interest 33,099,554.22 

-  $66,639,066.22 

Central  Pacific   (including  Western  Pacific) : 

Principal     27,855,680 . 00 

Accrued    interest 26,792,145.01 

54,647,825.01 

Sioux  City  and  Pacific: 

Principal     1,628,320.00 

Accrued    interest 1,561,996.69 

3,190,316.69 

Central  Branch  Union  Pacific: 

Principal     1,600,000 . 00 

Accrued    interest 1,645,808 . 26 

3,245,808.26 


Total    127,723,016 . 18 

TOTAL    CREDIT. 

Transportation   services  performed   and  money  paid   into   the   Treasury: 

Union  Pacific: 

Transportation  services  applied  to  bond  and  in- 
terest account $13,061,399 . 39 

Half  transportation  applied  to  sinking  fund 

under  act  of  May  7,  1878 2,508,274.94 

Cash  payment,  sinking  fund,  under  act  of  May  7, 

1878  788,173  43 

Interest    on    sinking-fund    investments 139,127   97 

$16,496,975.73 

Central  Pacific: 

Transportation     services     applied     to    bond     and 

interest    account $4,793,984 . 43 

Cash   payment,   5   per   cent,   net   earnings,   under 

acts  of   1862   and   1864 648,271.96 

Cash  payment,  sinking  fund,  under  act  of  May  7, 

1878     633,992 . 48 

Half     transportation     applied     to     sinking     fund 

under   act   9f   May   7,   1878 1,844,423.17 

Interest   on   sinking  fund   investments 170,107.83 

$8,090,779.87 

Sioux  City  and   Pacific: 

Transportation  services  applied  to  bond  and  interest  account.  .  131,138.32 

Central  Branch  Union  Pacific: 

Transportation     services    applied    to    bond     and 

interest     account 162,401 . 27 

Cash    payment,   5    per   cent,   net   earnings,   under 

acts  of  1862  and   1864 6,926.91 

169,328.18 

Total     24,888,222 . 10 

Balance  in  favor  of  the  Utiited  States,  but  not  due  until  matu- 
rity   of    principal,    1895-'99 102.834,794.08 

156 


RECAPITULATION. 

Due  from   llnion     Pacific *. $50,142,090.49 

Due  from   Central    Pacific 46,557,045 . 14 

Due  from   Sioux    City   and    Pacific 3,059,178.37 

Due  from  Central    Branch    Union    Pacific 3,076,480.08 

Total      '. 102,834,794.08 

EXPENSES. 

Conducting    transportation $  1,645,743  . 20 

Maintenance    of    way    2,380,501 . 45 

Motive    power     .  .  .  ." 2,812,921 . 59 

Maintenance    of    cars    797,325 .92 

General  expenses  and  taxes    563,328 . 40 

$     8,208,820.56 

TOTAL    OPERATING     EXPENSES. 

'Interest  paid  on  first  mortgage  bonds  having 
priority  of  lien  over  those  of  the  United 
States,  ledger  folio  386 1,630,860 . 00 

Total   expenses  under  act  of  May  7,   1878 $     9,839,680.56 

Net    earnings    so    ascertained    7,305,179.93 

Twenty-five   per   centum    of   net   earnings 1,826,294.98 

Amount    of   transportation    rendered    as    above 1,019,547.85 

Less   difference   in    amount   claimed    by   company....  7,231.23 

1,012,316.62 

Remainder,     cash     or     additional     payment     required 

by     law      : 813,978.36 

APPLICATION. 

One    half    transportation    services    claimed 506,158.31 

Cash   payment,   five   per   cent   of  net   earnings 365,259.00 

To  credit   of  bond  and   interest  account 871,417.31 

One    half    transportation    services    claimed 506,158.31 

Cash  payment  being  that  portion  of  the  $850,000 
named  in  section  4  of  the  act  of  May  7,  1878, 

payable    into    the    sinking    fund 448,719.^(1 

954,877.67 


$     1,826,294.98 


AX   ACT  authorizing  an  investigation  of  the  books,  accounts,  and  methods  of  rail- 
roads which  have  received  aid  from  the  United  States,  and  for  other  purposes. 

SEC.  4.  That  whenever,  in  the  opinion  of  the  President,  it  shall  be 
deemed  necessary  to  the  protection  of  the  interests  and  the  preserva- 
tion of  the  security  of  the  United  States  in  respect  of  its  lien,  mort- 
gage, or  other  interest  in  any  of  the  property  of  any  or-  all  of  the 
several  companies  upon  which  a  lien,,  mortgage  or  other  incumbrance 
paramount  to  the  right,  title  or  interest  of  the  United  States  for  the 
same  property,  or  any  part  of  the  same,  may  exist  and  be  hen  law- 
fully liable  to  be  enforced,  the  Secretary  of  the  Treasury  shall,  under 
the  direction  of  the  President,  redeem  or  otherwise  clear  off  such  para- 


157 


mount  lien,  mortgage,  or  other  incumbrance  by  paying  the  sums  law- 
fully due  in  respect  thereof  out  of  the  Treasury;  and  the  United 
States  shall  thereupon  become  and  be  subrogated  to  all  rights  and 
securities  theretofore  pertaining  to  the  debt,  mortgage,  lien,  or  other 
incumbrance  in  respect  of  which  such  payment  shall  have  been  made. 
It  shall  be  the  duty  of  the  Attorney  General,  under  the  direction  of 
the  President  to  take  all  such  steps  and  proceedings,  in  the  courts 
and  otherwise,  as  shall  be  needful  to  redeem  such  lien,  mortgage  or 
other  incumbrance,  and  to  protect  and  defend  the  rights  and  interests 
of  the  United  States  in  respect  of  the  matter  in  this  section  mentioned, 
and  to  take  steps  to  foreclose  any  mortgages  or  lien  of  the  United 
Staes  on  any  such  railroad  propery. 

SEC.  5.  That  the  sinking-funds  which  are  or  may  be  held  in  the 
Treasury  for  the  security  of  the  indebtedness  of  either  or  all  of  said 
railroad  companies  may,  in  addition  to  the  investments  now  authorized 
by  law,  be  invested  in  any  bonds  of  the  United  States  heretofore  issued 
for  the  btnefit  of  either  or  all  of  said  companies,  or  in  any  of  the 
first-mortgage  bonds  of  either  or  all  of  said  companies,  which  have 
been  issued  under  the  authority  of  any  law  of  the  United  States  and 
secured  by  mortgages  of  their  roads  and  franchises,  which  by  any  law 
of  the  United  States  have  been  made  prior  and  paramount  to  the  mort- 
gage, lien,  or  other  security  of  the  United  States  in  respect  of  its 
advances  to  either  of  said  companies  as  provided  by  law. 

From  Daily  Morning  Chronicle,  June  21,  1867.    Editorial. 

We  print  elsewhere  the  proceedings  in  the  Cabinet  meeting 
held  on  Tuesday.  A  deliberate  effort,  we  understand,  was 
made  by  certain  parties  to  prevent  the  Chronicle  from  getting 
this  interesting  document.  We  are  not  informed  as  to  the 
ringleaders  in  this  conspiracy  against  us,  but  we  hear  Presi- 
dent Johnson  and  his  "learned  Theban''  had  something  to  do 
with  it.  We  are  sorry  Mr.  Johnson  has  "gone  back  on  us,"  to 
use  a  common  phrase.  Stanbery  doubtless  feels  that  we  have 
no  claim  upon  him.  Welles,  we  presume,  did  not  think  it  im- 
portant, because  it  has  no  bearings  upon  naval  affairs.  Mc- 
Culloch's  contract  with  us  does  not  extend  beyond  news  con- 
nected with  the  Treasury  Department.  Randall  never  ap- 
points a  postmaster  without  letting  us  into  the  secret,  but  he 
has  no  interest  in  military  commanders  and  registration  and  he 
naturally  supposed  we  were  equally  indifferent  about  these 

158 


matters.  Browning  was  not  present,  and  his  deputy  is  not 
posted  as  to  the  Secretary's  arrangement  with  us.  But  Seward 
—dear  Mr.  Seward— he  never  forgets  the  Chronicle.  He  was 
the  "chief  among  then  takin'  notes."  It  is  useless  for  John- 
son and  Stanbery  to  combine  against  us  while  the  philosopher 
of  Auburn  is  in  the  Cabinet.  The  mission  to  Mexico  may  be 
neglected,  the  American  claims  upon  England  may  remain 
unsettled,  but  the  Secretary  of  State  will  not  allow  the  Chron- 
icle to  appear  without  news. 
From  the  National  Intelligencer,  Feb.  6,  1867. 

THE  TREASURY  INVESTIGATION. 

The  Congressional  Committee  to  investigate  affairs  in  the 
Treasury  Department  have  deferred  their  investigation  until 
the  completion  of  the  report  of  the  comnittee  previously  ap- 
pointed for  the  same  purpose  by  the  Secretary  of  the  Treas- 
ury. The  latter  committee,  composed  of  some  of  the  most  re- 
liable officers  of  the  Department  have  concluded  their  exam- 
ination and  are  preparing  their  report,  which  will  show  that 
they  have  failed  to  discover  any  of  the  frauds  that  were  in- 
timated. 

It  is  said,  however,  that  there  is  additional'  testimony  to  be 
presented  to  the  Congressional  Committee  that  was  not  ac- 
cessible to  that  organized  by  the  Secretary. 
From  the- Washington  Daily  Chronicle,  July  6,  186(5.     Part  of 
editorial. 

NEW  COLATION. 

The  intenate  cordial -is  at  length  established  between  the 
Republican  and  Copperhead  friends  of  the  President's  policy. 
It  was  doubtless  by  arrangement  that  the  former  put  forth 
the  call  for  the  so-called  National  Union  Convention  to  be  held 

-159 


in  Philadelphia  in  August  next. 
Closing  paragraph : 

The  eolation  therefore  will  not  embrace  the  loyalists  of  the 
South.  They  are  to  become  Pariahs  and  outcasts  under  the 
President's  policy  while  the  rebels  whose  first  choice  for  Pres- 
ident would  be  Robert  E.  Lee,  then  second  Jeff  Davis,  and 
then  third  Andrew  Johnson,  one  to  be  accepted  by  the  Na- 
tional Convention. 
Jan.  20,  1866. 

THE  USURPER,  ANDREW  JOHNSON. 

We  take  occasion  again  to  say,  as  we  have  said  before,  that 
we  do  not  protest  against  this  usurpation  because  we  have  any 
fear  that  it  will  be  consummated. 

The  Republican  party  in  Congress,  the  men  like   Senator 
Sumner,  Wade  and  others,  are  as  much  pledged  to  resist  Ex- 
ecutive encroachments  as  the  most  determined  adherent  of  the 
opposition  to  the  administration. 
From  the  Evening  Star,  Nov.  14,  1867.    News  item. 

Within  a  few  days  past  Hon.  Hugh  McCulloch,  Secretary 
of  the  Treasury,  tendered  his  resignation  to  President  John- 
son.   Yesterday  the  President  addressed  the  Secretary  a  note, 
requesting  him  to  withdraw  his  letter  of  resignation,  and  it 
stated  today  that  the  request  has  been  complied  with. 
The  Daily  Morning  Chronicle,  Wash.,  D.  C.,  Jan.  18,  1866. 
Column  5. 

VISITORS  IN  THE  SENATE. 

During  the  delivery  of  Senator  Doolittle's  speech,  in  the 
Senate  yesterday,  the  galleries  were  filled  to  repletion.  Among 
the  visitors  on  the  floor  of  the  Senate  were  Hon.  H.  J.  Ray- 
mond, Hon.  Horace  Maynard,  and  Hon.  S.  J.  Randall.  Lieu- 

160 


tenant  General  Grant  and  General  Rufus  Ingalls  were  among 
the  most  attentive  auditors,  occupying  seats  in  that  portion 
of  the  gallery  reserved  for  the  diplomatic  corps. 
From  the  Evening  Star,  May  11,  1867.     Editorial. 

SENATOR  DOOLITTLE'S  MISSION. 
Senator  Doolittle  has  left  Washington   for  New  York  en 
route  to  Europe.    His  visit  there  is  in  the  interest  of  railroad 
men  of  this  country,  and  it  is  stated  that  Mr.  Seward,  hearing 
of  the  Senator's  intended  visit,  gave  him  official  authorization 
to  treat  with  Denmark  for  the  purchase  of  the  Island  of  St. 
Thomas. 
From  the  Daily  Chronicle,  Jan.  12,  1866.    Page  2. 

THE  PRESIDENT  AND  CONGRESS. 

The  last  and  what  we  predict  will  prove  to  be  the  most  ut- 
terly disappointed  hope  of  the  men  who  are  longing  to  resume 
that  fatal  ascendency  in  the  National  councils  which  assisted 
and  hastened  a  bloody  rebellion,  is  to  create  an  irreconcilable 
difference  and  to  precipitate  an  acrimonious  controversy  be- 
tween President  Johnson  and  the  representatives  of  the 
American  people  in  Congress  assembled.  Anything  for  power 
is  their  motto.  They  change  their  expedients  with  the  quick- 
ness of  the  actor  who  has  studied  the  art  of  transforming  him- 
self into  many  characters.  Yesterday  we  quoted  copiously 
fro.n  the  National  Intelligencer  of  October,  1864,  showing  the 
virulent  spirit  against  Andrew  Johnson,  when  he  was  fighting 
his  unparalleled  battle  with  the  traitors  in  Tennessee,  of  the 
same  men  who  still  own  and  run  that  organ  of  the  unforgiv- 
ing and  ungrateful  disloyalists  in  our  midst. 
From  Daily  Chronicle,  July  11,  1866.  Page  1. 

Treasury :  The  Union  Pacific  Railroad, — The  fourth  section 

161 


of  20  miles  of  the  Union  Pacific  Railroad,  eastern  division, 
having  been  completed  and  a  report  to  that  effect  having  been 
made  by  the  commissioners,  Gen.  J.  H.  Simpson,  Hon.  Wm. 
M.  White,  and  Hon.  Wm.  Prescott  Smith,  the  Secretary  of 
the  Treasury  has  ordered  the  issue  to  the  above  named  rail- 
road company  of  bonds  to  the  amount  of  $320,000,  to  which 
by  law  they  are  entitled. 

The  Secretary  has  also  ordered  the  issue  of  bonds  to  the 
amount  of  $640,000  to  the  Central  Pacific  Railroad  Company, 
of  California,  on  the  completion  of  one- fourth  jof  the  work  of 
a  section  of  20  miles  of  the  road,  the  cost  of  which  has  ex- 
ceeded $1,015,000. 
September  10,  1866. 

Treasury:  The  Pacific  Railroad  Bonds. — The  bonds  in- 
crease steadily  in  amount  as  the  road  advances  westward.  On 
January  1,  the  total  was  $3,002,000;  April  1,  $4,634,000;  Au- 
gust 1,  $6,042,000;  September  1,  $8,202,000;  an  increase  since 
the  beginning  of  the  year  of  $5,200,000,  and  for  the  month  of 
$2,160,000. 

REPORT  OF  THE  COMMISSIONER  APPOINTED  TO 
SETTLE  THE  INDEBTEDNESS  TO  THE  GOV- 
ERNMENT GROWING  OUT  OF  THE  ISSUE  OF 
BONDS  IN  AID  OF  THE  CONSTRUCTION  OF 
THE  CENTRAL  PACIFIC  AND  WESTERN  PA- 
CIFIC RAILROADS. 

Washington,  D.  C.,  February  15,  1899. 
To  the  House  of  Representatives: 

The  undersigned  commissioners,  appointed  by  the  deficiency 
appropriation  act  approved  July  7,  1898,  to  settle  the  indebt- 
edness to  the  Government  growing  out  of  the  issue  of  bonds  in 
aid  of  the  construction  of  the  Central  Pacific  and  Western 


Pacific  Railroads,  would  respectfully  report  that  they  have 
concluded  a  settlement  of  the  said  indebtedness  with  the  Cen- 
tral Pacific  Railroad  Company,  the  owner  of  the  said  railroads. 
A  copy  of  the  agreement  of  settlement  is  herewith  transmitted. 

The  settlement  is  made  as  of  the  1st  day  of  February,  1899, 
at  which  date  the  amount  due  to  the  United  States  for  prin- 
cipal and  interest  upon  its  subsidy  liens  upon  the  Central  Pa- 
cific and  Western  Pacific  Railroads  amounted  to  the  sum  of 
$58,812,7J.5,48,  that  being  the  full  amount  necessary  to  reim- 
burse the  United  States  for  the  moneys  paid  for  interest  or 
otherwise  in  aid  of  the  construction  of  said  railroads. 

Said  indebtedness  is,  by  the  agreement  of  settlement,  funded 
at  the  amount  aforesaid  into  twenty  promisory  notes,  dated 
February  1,  1899,  payable,  respectively,  on  or  before  the  ex- 
piration of  each  successive  six  months  for  ten  years,  each  note 
being  for  the  sum  of  $2,940,635.78,  which  is  one-twentieth  of 
the  total  amount  due.  Said  note  bears  interest  at  the  rate  of  3 
per  cent  per  annum,  payable  semiannually,  and  have  a  condi- 
tion attached  thereto  to  the  effect  that  if  default  be  made,  in 
any  payment  of  either  principal  or  interest  of  any  of  said 
notes,  or  any  part  thereof,  then  all  of  said  notes  then  outstand- 
ing, principal  and  interest,  shall  immediately  become  due  and 
payable,  notwithstanding  any  other  stipulation  of  the  agree- 
ment of  settlement. 

It  is  further  provided  that  the  payment  of  the  principal  and 
interest  of  said  notes  shall  be  secured  by  $58,820,000  of  face 
value  first  refunding  mortgage  4  per  cent  gold  bonds  to  be 
hereafter  issued  by  the  Central  Pacific  Railroad  Company,  or 
its  successor,  having  title  to  the  railroads  now  owned  by  said 
company  and  specified  in  said  agreement,  such  bonds  to  be 
part  of  an  issue  of  not  exceeding  $100,000,000  in  all. 

Said  bonds  are  to  be  secured  by  a  mortgage  upon  all  rail- 

163 


roads,  equipments,  and  terminals  now  owned  by  said  Central 
Pacific  Railroad  Company,  which  mortgage  shall  be  the  first 
lien  upon  such  property,  or  shall  be  secured  by  the  deposit  as 
collateral  security  therefor  of  certain  percentages  of  the  now 
outstanding  bonds  upon  said  property,  or  the  different  divis- 
ional parts  thereof.  The  form  of  such  mortgage  is  subject  to 
the  agreement  of  the  parties  to  said  agreement  of  settlement, 
and  has  been  approved  by  the  Attorney  General. 

The  agreement  further  provides  that  Speyer  &  Company, 
who  are  a  party  thereto  shall,  within  one  month  after  the  de- 
livery to  the  United  States  of  the  settlement  notes,  accept  from 
the  Secretary  of  the  Treasury,  the  four  earliest  maturing 
notes,  and  pay  to  the  United  States  the  face  value  thereof, 
with  accrued  interest  thereon  to  the  date  of  payment,  without 
recourse  further  than  that  Speyer  &  Co.  shall,  until  the  deliv- 
ery of  the  refunding  bonds  as  collateral,  be  entitled  to  share 
pro  rata  with  the  United  States  in  the  lien  and  all  proceeds  of 
the  lien  in  favor  of  the  United  States  to  secure  said  indebted- 
ness. 

The  said  agreement  was  submitted  in  writing  to  the  Presi- 
dent and  approved  by  him  on  the  15th  day  of  February,  and 
the  said  promisory  notes  have  been  duly  delivered  to  the 
Treasurer  of  the  United  States. 

Other  provisions  and  particulars  of  said  agreement  will  ap- 
pear by  a  perusal  thereof,  to  which  reference  is  respectfully 
made. 

The  execution  of  the  agreement  was  duly  authorized  by 
resolution  of  the  board  of  directors  of  the  Central  Pacific  Rail- 
road Company,  and  approved  by  the  formal  action  and  consent 
of  a  large  majority  of  the  stockholders. 

164 


The  commissioners  have  not  found  it  necessary  to  expend 
any  part  of  the  sum  of  $20,000  appropriated  for  the  expenses 
of  the  commission. 

LYMAN  J.  GAGE, 
Secretary  of  the  Treasury. 
CORNELIUS  N.  BLISS, 
Secretary  of  the  Interior. 
JOHN  W.  GRIGGS, 

Attorney  General. 

And  whereas,  by  act  of  Congress  entitled,  "An  act  making 
appropriations  to  supply  deficiencies  in  the  appropriations  for 
the  fiscal  year  ending  June  thirtieth,  eighteen  ^  hundred  and 
ninety-eight,  and  for  prior  years,  and  for  other  purposes,"  ap- 
proved July  7,  1898,  it  was  among  other  things  provided  as. 
follows,  viz:  "That  the  Secretary  of  the  Treasury,  the  Sec- 
retary of  the  Interior  and  the  Attorney  General,  and  their  suc- 
cessors in  office,  be,  and  they  are  hereby,  appointed  a  com- 
mission with  full  power  to  settle  the  indebtedness  to  the  Gov- 
ernment growing  out  of  the  issue  of  bonds  in  aid  of  the  con- 
struction of  the  Central  Pacific  and  Western  Pacific  bond- 
aided  railroads  upon  such  terms  and  in  such  manner  as  may  be 
agreed  upon  by  them,  or  by  majority  of  them,  and  the  own- 
ers of  said  railroads:  Provided,  That  any  and  all  settlements 
thus  made  shall  be  submitted  in  writing  to  the  President  for 
his  approval  or  disapproval,  and  unless  approved  by  him  shall 
not  be  binding.  ^ 

''That  said  commission  shall  not  agree  to  accept  a  less  sum 
in  settlement  of  the  amount  due  the  United  States  than  the  full 
amount  of  the  principal  and  interest  and  all  amounts  neces- 
sary to  reimburse  the  United  States  for  moneys  paid  for  in- 
terest or  otherwise :  And  also  provided,  That  said  commission 

165 


are  hereby  empowered  to  grant  such  time  or  times  of  payment 
by  installment,  and  at  such  rates  of  interest,  to  be  not  less  than 
three  per  centum  per  annum,  payable  semiannually,  and  with 
such  security  as  to  said  commission  may  seem  expedient :  Pro- 
vided however,  That  in  any  settlement  that  may  be  made  the 
final  payment  and  full  discharge  of  said  indebtedness  shall  not 
be  postponed  to  exceed  ten  years  and  the  whole  amount,  prin- 
cipal and  interest,  shall  be  paid  in  equal  semiannual  instal- 
ments within  the  period  so  limited,  and  in  any  settlement  made 
it  shall  be  provided  that  if  default  shall  be  made  in  any  pay- 
ment of  either  principal  or  interest,  or  any  part  thereof  then 
the  whole  sum  and  all  instalments  principal  and  interest  shall 
immediately  become  due  and  payable,  notwithstanding  any 
other  stipulation  of  said  settlement:  Provided  further,  That 
unless  the  settlement  herein  authorized  be  perfected  within  one 
year  after  the  passage  of  this  act  the  President  of  the  United 
States  shall  at  once  proceed  to  foreclose  all  liens  now  held  by 
the  United  States  against  said  railroad  companies  and  to  col- 
lect the  indebtedness  herein  sought  to  be  settled ;  and  nothing 
in  this  act  contained  shall  be  held  to  waive  or  release  any  right, 
lien,  or  cause  of  action  already  held  by  the  United  States. 

''That  there  is  hereby  appropriated,  out  of  any  money  in  the 
Treasury  not  otherwise  appropriated,  the  sum  of  twenty  thou- 
sand dollars  to  defray  the  expenses  of  said  commission  in 
making  the  said  settlement." 

And  whereas  it  has  been  agreed  by  and  between  the  com- 
mission appointed  by  said  act  and  the  owners  of  the  railroads 
above  described  that  the  indebtedness  of  the  United  States 
growing'out  of  the  issue  of  bonds  in  aid  of  the  construction  of 
the  Central  Pacific  and  Western  Pacific  bond-aided  railroads 
should  be  settled  upon  the  terms  and  in  the  manner  hereinafter 
agreed  to,  subject  to  the  approval  of  the  President  of  the 

166 


United  States,  as  provided  in  said  last-mentioned  act; 

And  whereas  Messrs.  Speyer  &  Company  from  time  to  time 
negotiated  the  sale  of  large  amounts  of  the  bonds  secured  by 
mortgage  upon  the  railroads  of  the  Central  Pacific  Railroad 
Company  above  mentioned,  and  are  desirous  of  co-operating 
in  a  settlement  of  all  matters  relating  to  or  affecting  the  in- 
debtedness of  said  company  and  the  adjustment  of  its  affairs ; 

And  whereas  of  the  first  mortgage  bonds  of  the  Central 
Pacific  Railroad  Company  of  California  secured  upon  the 
bond-aided  lines  above  mentioned,  and  amounting  in  the  ag- 
gregate at  their  face  value  to  twenty-five  million  eight  hun- 
dred and  eighty-one  thousand  dollars  ($25,881,000),  there 
have  been  already  deposited  and  still  remain  on  deposit,  sub- 
ject to  the  order  of  Messrs.  Speyer  &  Company,  bonds  to  the 
amount  at  their  face  value  of  twenty-five  million  six  hundred 
and  thirteen  thousand  dollars  ($25,613,000)  under  a  bond- 
holders' agreement  dated  August  14,  1897,  a  copy  whereof  has 
been  furnished  to  the  party  of  the  first  part  thereto; 

And  whereas  of  the  Central  Pacific  Railroad  Company's 
fifty-year  five  per  cent  bonds  issued  under  the  mortgage  to  the 
Metropolitan  Trust  Company  of  the  City  of  New  York,  dated 
April  1,  1889,  above  mentioned,  amounting  in  the  aggregate 
(after  deducting  said  bonds  so  as  aforesaid  held  as  security 
for  the  said  land  bonds)  to  the  sum  of  ten  million  two  hundred 
and  forty-five  thousand  dollars  ($10,245,000)  there  have  been 
deposited  and  still  remain  on  deposit,  subject  to  the  order  of 
Messrs.  Speyer  &  Company,  bonds  to  the  amount  at  their  face 
value  of  eight  million  six  hundred  and  eighty-six  thousand  dol- 
lars ($8,686,000)  under  a  bondholders'  agreement  dated  Oct. 
1,  1897,  a  copy  whereof  has  been  furnished  to  the  party  of  the 
first  part  hereto. 

And  whereas  the  owners  of  the  bonds  deposited  under  each 

167 


of  the  aforesaid  agreements  of  Aug.  14, 1897,  and  Oct.  1, 1897, 
have  thereby  authorized  Messrs.  Speyer  &  Co.  in  their  behalf, 
to  negotiate  with  any  other  committees  or  representatives  of 
holders  of  other  securities  of  said  railroad  company  or  with 
the  Government  of  the  United  States  or  otherwise,  for  par- 
ticipation in  respect  of  the  deposited  bonds  in  any  plan  of 
readjustment  or  reorganization  or  otherwise. 

And  whereas  there  have  been  deposited  with  committees 
consisting  of  F.  G.  Banbury,  M.  P.,  John  B.  Akroyd,  Lord 
Alwyne  Compton,  M.  P.,  Daniel  Marks,  and  Joseph  Price  in 
London,  and  August  Belmont,  Hon.  John  G.  Carlisle,  and 
George  Coppell,  in  New  York,  under  agreements,  copies  of 
which  have  been  furnished  to  the  party  of  the  first  part,  cer- 
tificates of  the  capital  stock  of  the  Central  Pacific  Railroad 
Company  to  the  amount,  at  their  face  value,  of  at  least  thirty- 
eight  million  four  hundred  and  one  thousand  eight  hundred  dol- 
lars ($38,401,800),  out  of  a  total  outstanding  capital  stock  of 
said  company  amounting,  at  its  par  value;  to  sixty-seven  million 
two  hundred  and  seventy-five  thousand  five  hundred  dollars 
($67,275,500),  and  the  said  committees  have  authorized  and 
requested  the  said  Speyer  &  Company  to  negotiate,  on  their 
behalf,  with  the  commission  appointed  by  the  act  of  Congress 
of  July  7,  1898,  above  referred  to,  the  basis  of  a  settlement 
under  and  in  the  pursuance  of  the  said  act  of  the  indebtedness 
to  the  United  States  growing  out  of  the  issue  of  bonds  in  aid 
of  the  construction  of  said  Central  Pacific  and  Western  Pacific 
bond-aided  railroads  above  mentioned. 

Now,  therefore,  this  agreement  witnesseth  that,  in  consid- 
eration of  the  premises,  the  parties  hereto  have  undertaken, 
covenanted,  and  agreed,  and  do  hereby  undertake,  covenant, 
and  agree,  to  and  with  each  other  as  follows,  that  is  to  say : 

That  the  indebtedness  to  the  United  States  growing  out  of 

168 


the  issue  of  bonds  in  aid  of  the  construction  of  the  Central  Pa- 
cific and  Western  Pacific  bond-aided  railroads  shall  be,  and  it 
hereby  is,  settled  upon  the  terms  and  in  the  manner  following, 
that  is  to  say: 

FIRST. 

The  .amount  due  the  United  States,  being  the  full  amount 
of  the  principal  and  interest,  and  all  amounts  necessary  to  re- 
imburse the  United  States  for  moneys  paid  for  interest  or 
otherwise,  is  hereby  found  and  agreed  to  be,  on  the  day  of  the 
date  of  this  agreement,  the  sum  of  fifty-eight  million  eight  hun- 
dred and  twelve  thousand  seven  hundred  and  fifteen  dollars 
and  forty-eight  cents  ($58,812,715.48). 

SECOND. 

Within  thirty  days  after  this  settlement  shall  become  binding 
by  the  submission  thereof  in  writing  to  the  President,  and  his 
approval  thereof,  the  Central  Pacific  Railroad  Company  shall 
deliver  to  the  Treasurer  of  the  United  States  its  twenty  prom- 
isory  notes,  bearing  even  date  herewith,  payable  respectively 
on  or  before  the  expiration  of  each  successive  six  months  for 
ten  years  counting  from  the  date  of  this  agreement,  each  note 
being  for  one-twentieth  of  the  foregoing  sum  of  $58,812,- 
715,48,  and  bearing  interest  at  the  rate  of  three  per  cent  per 
annum,  payable  semiannually. 

Provided,  however,  That  if  default  shall  be  made  in  any 
payment  of  either  principal  or  interest  of  any  of  said  notes,  or 
any  part  thereof,  then  all  of  said  notes  then  outstanding,  prin- 
cipal and  interest,  shall  immediately  become  due  and  payable 
notwithstanding  any  other  stipulation  of  this  agreement  of  set- 
tlement. 

Each  of  the  said  notes  shall  be  in  the  following  form,  viz : 

169 


San  Francisco,  Cal.,  Feb.  1,  1899. 

On  or  before the  Central  Pacific  Railroad  Com- 
pany will  pay  to  the  order  of  the  United  States  of  America, 
two  million  nine  hundred  and  forty  thousand  six  hundred  and 
thirty-five  78/100  dollars,  with  interest  meantime  at  the  rate 
of  three  per  cent  per  annum,  payable  semiannually,  for  value 
received. 

This  is  one  of  a  series  of  twenty  notes  given  by  said  rail- 
road company  to  the  United  States  of  America,  each  for  the 
same  principal  sum  and  bearing  interest  at  the  same  rate,  but 
maturing  at  different  dates;  that  is  to  say,  on  or  before  the 
expiration  of  each  successive  six  months  for  ten  years,  count- 
ing from  the  date  hereof.  If  default  shall  be  made  in  any  pay- 
ment of  either  principal  or  interest  of  any  said  notes  or  any 
part  thereof,  then  all  of  said  notes  then  outstanding,  prin- 
cipal and  interest,  shall  immediately  become  due  and  payable. 

THIRD. 

The  payment  of  the  principal  and  interest  of  the  said  notes 
and  of  the  indebtedness  represented  thereby  shall  be  secured 
by  the  pledge  of  $58,820,000,  face  value,  first  refunding  mort- 
gage four  per  cent  gold  bonds  issued  by  the  Central  Pacific 
Railroad  "Company,  or  its  successor  company  having  title  to 
the  foresaid  railroads,  such  bonds  to  be  part  of  an  issue  here- 
inafter described,  not  exceeding  $100,000,000  in  all,  one-twen- 
tieth part  of  such  pledged  bonds  to  be  held  as  security  for  each 
of  said  note. 

FOURTH. 

The  said  refunding  bonds  so  to  be  pledged  as  security  for 
the  payment  of  the  said  notes  and  interest  shall  be  delivered 
to  the  Treasurer  of  the  United  States  within  a  reasonable  time 


170 


after  this  settlement  becomes  binding,  for  obtaining  the  deposit 
of  securities,  the  assent  of  security  owners,  and  the  carrying 
out  of  such  plan  of  reorganization  or  readjustment  as  may  be 
necessary  to  enable  the  Central  Pacific  Railroad  Company  or 
its  successor  company  to  issue  said  refunding  bonds  and  make 
the  mortgage  to  secure  the  same  a  valid  lien  upon  the  rail- 
roads aforesaid  in  accordance  with  the  requirements  herein 
expressed.  A  period  of  ten  months  from  the  delivery  of  said 
notes  is  hereby  declared  to  be  prima  facie  such  reasonable 
time,  but  the  Central  Pacific  Railroad  Company  agrees  to  use 
its  best  efforts  to  perfect  such  mortgage  and  deliver  such  bonds 
before  the  expiration  of  that  time;  and,  on  the  other  hand, 
should  such  reorganization  or  readjustment  be  delayed  by  the 
pendency  of  judicial  proceedings  for  the  purpose  of  enabling 
the  company  which  is  to  make  the  new  mortgage  to  execute 
and  deliver  refunding  bonds  secured  as  provided  herein  or  be 
delayed  by  adverse  litigation,  such  period  is  to  be  correspond- 
ingly extended :  Provided,  however,  That  such  period  shall  not 
be  extended  for  any  cause  whatever  for  more  than  three  years 
from  the  date  of  this  agreement,  except  with  the  written  ap- 
proval of  the  President  of  the  United  States. 

If  default  shall  be  made  in  the  delivery  of  the  said  bonds  so 
to  be  pledged  within  the  period  hereinabove  prescribed  for 
such  delivery  thereof,  including  any  extension  which  there 
may  have  been  under  the  foregoing  provisions,  then  the  whole 
amount  of  the  said  notes  then  outstanding,  principal  and  in- 
terest, shall  immediately  become  due  and  payable. 

The  said  first  refunding  mortgage  four  per  cent  gold  bonds 
referred  to  in  article  third  and  this  article  of  this  agreement, 
are  to  run  for  at  least  forty-five  years,  and  to  bear  interest  at 
the  rate  of  four  per  cent  per  annum,  payable  semiannually, 
and  are  to  be  payable,  principal  and  interest,  in  gold  coin  of 


171 


the  United  States,  and  are  to  be  a  part  of  an  issue  not  exceed- 
ing one  hundred  million  dollars  face  value,  secured  by  mort- 
gage upon  all  the  railroads,  equipment,  and  terminals  now 
owned  by  the  Central  Pacific  Railroad  Company.  Such  mort- 
gages shall  be  the  first  lien  upon  the  said  railroads,  equipment, 
and  terminal,  or  shall  be  secured  by  deposit  as  COLLAT- 
ERAL security  therefor  of  at  least  ninety  per  cent  of  the  now 
outstanding  first  mortgage  bonds  of  the- Central  Pacific  Rail- 
road Company  of  California  and  Western  Pacific  Railroad 
Company  referred  to  in  paragraphs  first,  second,  and  third  in 
the  recitals  to  this  agreement  describing  the  mortgages  and 
liens  on  "bond-aided  lines,"  and  of  at  least  seventy-five  per 
cent  of  the  aggregate  of  all  now  outstanding  bonds  of  the  Cen- 
tral Pacific  Railroad  Company  and  of  all  now  outstanding 
boncls  of  the  divisional  companies  by  the  consolidation  where- 
of it  was  formed,  including  such  first  mortgage  bonds  of  the 
Central  Pacific  Railroad  Company  of  California  and  Western 
Pacific  Railroad  Company.  In  making  such  computation  as  to 
the  amount  of  deposited  bonds,  it  is  agreed  that  the  $2,038,- 
000  fifty-year  five  per  cent  bonds  held  as  security  for  the  out- 
standing land  bonds  as  above  stated,  shall  not  be  counted  as 
outstanding  bonds. 

If  any  of  the  mortgages  now  securing  any  of  the  outstand- 
ing bonds  aforesaid  (other  than  the  mortgage  securing  the 
land  bonds  dated  Oct.  1,  1870,  above  referred  to),  shall  be  satis- 
fied and  discharged,  such  satisfaction  and  discharge  thereof  shall 
be  deemed  to  be  the  equivalent  of  the  deposit  of  all  outstand- 
ing bonds  now  secured  thereby  as  security  for  the  said  refund- 
ing bonds.  The  satisfaction  and  discharge  of  the  said  mort- 
gage securing  the  land  bonds  dated  Oct.  1,  1870,  shall  be 
deemed  to  be  the  equivalent  of  the  deposit  as  security  for  said 
refunding  bonds  of  all  bonds  now  secured  by  that  mortgage: 

172 


Provided,  That  the  $2,038,000  fifty-year  five  per  cent  bonds 
held  as  security  for  such  land  bonds  shall  either  be  canceled  or 
deposited  as  security  for  such  refunding  bonds. 

The  mortgage  securing  such  refunding  bonds  shall  be  prior 
in  lien  to  any  lease  of  the  railroads  of  said  Central  Pacific 
Railroad  Company  or  their  appurtenances  or  any  portion 
thereof,  and  shall  be  in  the  form  agreed  upon  by  the  parties 
hereto,  and  now  identified  by  the  signature  of  the  Attorney 
General  of  the  United  States,  unless  the  form  thereof  should 
be  hereafter  modified  with  the  consent  of  the  Attorney  Gen- 
eral of  the  United  States  and  the  party  of  the  second  part,  or 
its  successor  company,  and  the  party  of  the  third  part  hereto. 

Upon  the  satisfaction  of  record  of  any  existing  mortgage 
any  securities  or  funds  held  in  any  sinking  fund  created  or  ex- 
isting by  or  under  any  such  mortgage  shall  be  surrendered  to 
the  railroad  company  or  its  successor  company. 

The  lands  granted  to  the  Central  Pacific  Railroad  Company 
of  .California  and  to  the  California  and  Oregon  Railroad  Com- 
pany, as  above  stated,  are  not  to  be  covered  by  the  mortgage 
securing  such  refunding  bonds  until  the  delivery  to  the  Treas- 
urer of  the  United  States  of  the  refunding  bonds  to  be  pledged 
to  it  under  article  third  hereof,  secured  as  aforesaid,  all  rights 
of  the  United  States  in  respect  to  said  granted  lands  shall  re- 
main in  full  force  and  effect,  but  shall  not  be  enforced  unless 
the  Central  Pacific  Railroad  Company,  or  its  successor  com- 
pany, shall  make  default  under  this  agree  i:ent ;  and  upon  such 
delivery  of  said  refunding  bond,  secured  as  aforesaid,  all 
rights,  interest,  and  claims  of  the  United  States  in,  to,  and  in 
respect  to  such  lands  shall  cease  and  determine. 

From  time  to  time,  as  the  principal  or  any  part  of  the  prin- 
cipal of  said  notes  shall  be  paid,  the  United  States  or  other 
holders  of  said  notes  shall  return  to  said  railroad  company,  or 

173 


its  successors,  an  equal  amount  at  their  face  value  of  the  said 
refunding  bonds  with  all  unmatured  coupons  appertaining 
thereto;  and,  as  interest  shall  be  paid  upon  said  notes,  the 
United  States  or  other  holders  of  said  notes  shall  detach  and 
return  to  said  railroad  company  or  its  successors  the  coupons 
appertaining  to  said  bonds  representing  interest  thereon  to  the 
date  to  which  interest  shall  have  been  paid  upon  said  notes, 
which  coupons  shall  thereupon  be  forthwith  canceled. 

FIFTH. 

Until  the  refunding  bonds  hereinbefore  provided  for,  se- 
cured as  aforesaid,  shall  have  been  delivered  to  the  Treasurer 
of  the  United  States  as  security  for  the  said  notes,  the  lien  in 
favor  of  the  United  States,  reserved  in  the  acts  of  Congress 
above  mentioned  to  secure  the  repayment  to  the  United  States 
of  the  above  mentioned  indebtedness,  as  such  lien  now  exists, 
shall  remain  in  full  force  and  effect  to  the  extent  of  such  in- 
debtedness as  security  for  the  notes  representing  such  indebt- 
edness, and  nothing  herein  contained  shall  be  deemed  to  pre- 
vent the  United  States  from  intervening  for  the  protection  of 
its  said  lien  in  any  legal  proceedings  brought  to  foreclose  any 
lien  on  said  railroads  or  any  part  thereof  or  otherwise. 

When  the  Central  Pacific  Railroad  Company  or  its  suc- 
cessor company  shall  have  delivered  to  the  Treasurer  of  the 
United  States  said  refunding  bonds  secured  as  aforesaid,  then 
the  lien  in  favor  of  the  United  States  above  referred  to,  as 
then  existing,  shall  immediately  vest  in,  and  it  is  hereby,  upon 
the  happening  of  that  event,  transferred  to,  the  trustee  of  the 
mortgage  securing  such  refunding  bonds  as  security  for  the 
entire  issue  of  such  bonds. 

174 


SIXTH. 

Until  the  notes  to  be  given  by  the  Central  Pacific  Railroad 
Company  under  article  second  of  this  agreement  shall  have 
been  paid  in  full,  principal  and  interest,  all  amounts  due  to 
the  Central  Pacific  Railroad  Company  or  its  successor  com- 
pany from  the  United  States  subsequent  to  the  date  of  this 
agreement  in  respect  of  services  to  the  United  States  upon 
the  bond-aided  lines  from  a  point  about  five  miles  west  of 
Ogden  to  Sacramento,  and  from  Sacramento  to  San  Jose, 
above  referred  to,  shall,  as  audited  and  allowed,  be  applied  by 
the  United  States  pro  rata  on  account  of  the  amounts  remain- 
ing unpaid  on  such  of  said  notes  as  shall  not  have  been  pur- 
chased by  Messrs.  Speyer  &  Co.  hereunder,  such  application 
being  first  made  to  the  payment  of  accrued  interest  thereon 
and  thereafter  on  account  of  the  principal  thereof. 

SEVENTH. 

Messrs.  Speyer  &  Co.  within  one  month  after  the  delivery 
to  the  United  States  of  the  notes  referred  to  in  article  second 
hereof,  will,  against  delivery  to  them  of  the  four  earliest  ma- 
turing notes,  indorsed  to  their  order  by  the  Secretary  of  the 
treasury  on  behalf  of  the  United  States,  without  recourse  to 
it,  pay  to  the  United  States  the  face  value  of  such  notes,  viz : 
Eleven  million  seven  hundred  and  sixty-two  thousand  five 
hundred  and  forty-three  dollars  and  twelve  cents  ($11,762,- 
543.12)  with  accrued  interest  thereon  to  date  of  payment. 
From  and  after  the  time  when  such  payment  shall  have  been 
made  by  Messrs.  Speyer  &  Co.  they  shall,  until  the  delivery  of 
such  refunding  bonds,  be  entitled  to  share  pro  rata  with  the 
United  States  in  the  lien  and  all  proceeds  of  the  lien  in  favor 
of  the  United  States  to  secure  the  indebtedness  above  referred 
to.  Upon  delivery  of  the  said  refunding  bonds,  Messrs.  Speyer 

175 


&  Co.  shall  be  entitled  to  receive  such  bonds  to  the  amount,  at 
their  face  value,  of  the  principal  of  said  notes  then  remaining 
unpaid  which  are  then  held  by  said  Speyer  &  Co. 

AYithin  ten  days  after  the  maturity  of  each  of  said  notes 
held  by  Messrs.  Speyer  &  Co.,  the  said  Speyer  &  Co.  shall 
notify  the  Secretary  of  the  Treasury  of  the  United  States 
whether  such  matured  note  and  the  matured  interest  on  all  the 
notes  held  by  them  have  been  paid  to  them  or  not. 

Until  the  refunding  bonds  hereinbefore  provided  for  se- 
cured as  aforesaid  shall  have  been  delivered  to  the  Treasurer 
of  the  United  States  as  security  for  the  said  notes,  all  rights 
of  the  United  States  in  or  to  or  in  respect  of  the  said  lien, 
and  in  or  to  or  in  respect  of  the  lands  granted  as  aforesaid, 
shall  remain  unaffected  by  the  transfer  of  the  said  notes  to 
Speyer  &  Co.,  and  all  right  and  title  of  the  United  States  in 
the  said  lien,  and  in  respect  of  the  said  lands,  shall  be  deemed 
to  continue  in  the  United  States  as  fully  as  if  the  said  notes 
remained  in  its  possession  and  ownership,  save  only  that  the 
said  right  and  title  shall  be  deemed  to  be  held  by  the  United 
States  for  the  pro  rata  benefit  of  itself  and  said  Speyer  &  Co., 
and  the  United  States  may  bring  and  maintain  any  and  all 
actions,  suits,  and  proceedings  which  it  might  have  brought  or 
maintained,  and  may  do  any  and  all  acts  and  things  which  it 
might  have  done  had  all  the  said  notes  remained  in  its  pos- 
session and  ownership,  provided  that  all  recoveries,  benefits, 
and  advantages  derived  or  obtained  through  or  by  means  of 
such  actions,  suits,  proceedings,  and  acts  for  the  enforcement 
of  such  lien  and  rights,  shall  inure  to  the  pro  rata  benefit  of 
the  United  States  and  said  Speyer  &  Co.  In  case  of  any  de- 
fault in  payment  of  the  principal  or  interest  of  any  of  said 
notes,  the  United  States  will  thereupon  -  proceed  for  the  en- 
forcement of  the  said  lien. 

In  witness  whereof  this  agreement  has  been  executed  on 

176 


behalf  of  the  United  States  of  America  by  Hon.  Lyman  J. 
Gage,  Secretary  of  the  Treasury,  Hon.  Cornelius  N.  Bliss, 
Secretary  of  the  Interior,  and  Hon.  John  W.  Griggs,  Attor- 
ney General,  appointed  by  the  act  of  Congress  a  commission 
as  hereabove  stated ;  by  the  Central  Pacific  Railroad  Company, 
by  its  president  and  under  its  corporate  seal,  attested  by  its 
secretary,  and  by  Messrs.  Speyer  &  Co.,  under  their  hands,  the 
da>;  and  year  first  above  written.  Executed  in  triplicate. 

LYMAN  J.  GAGE, 

Secretary  of  the  Treasury. 
CORNELIUS  N.  BLISS, 

Secretary  of  the  Interior. 
JOHN  W:  GRIGGS, 

A  ttorn  ey-  G  eneral. 
Approved : 

WILLIAM  McKiNLEY. 

Central  Pacific  Railroad  Company, 

By  ISAAC  L.  REQUA, 

President. 
Attest : 

W.  M.  THOMPSON,  Secretary.        (SEAL) 

SPEYER  &  Co. 

State  of  California,  City  and  County  of  San  Francisco,  ss : 

On  this  6th  day  of  February  A.  D.  1899,  before  me,  E.  B. 
Ryan,  a  notary  public  in  and  for  the  city  and  county  of  San 
Francisco  duly  commissioned  and  sworn  personally  appeared 
Isaac  L.  Requa,  known  to  me  to  be  the  president,  and  W.  M. 
Thompson,  known  to  me  to  be  the  Secretary,  of  the  Central 
Pacific  Railroad  Company,  the  corporation  described  in  and 
who  executed  the  within  and  annexed  instrument,  and  ac- . 
knowledged  to  me  that  said  corporation  executed  the  same. 


177 


In  witness  whereof  I  have  hereunto  set  my  hand  and  affixed 
my  official  seal,  at  my  office  in  the  city  and  county  of  San 
Francisco,  the  day  and  year  in  this  certificate  first  above 
written. 

(SEAL)  E.  B.  RYAN, 

Notary   Public    in    and    for    the    City    and    County    of   San 
Francisco,  State  of  California. 


178 


CHAPTER  8 


SUPPLEMENTAL  INFORMATION   BY   AFFIDAVIT. 

It  is  stated  as  information  by  one  who  stood  in  intimate  relation  t6 
Charles  Durkee,  and  to  whom  he  committed  such  information  in 
keeping  as  a  secret  which  he  had  not  given  to  either  of  his  executors 
as  appointed  in  his  will,  that  shortly  before  his  death  he  called  this 
party  to  his  bedside,  and  said,  "that  he  had  had  his  suspicions  aroused 
by  certain  things  that  had  transpired  within  the  last  six  months;  that 
one  of  his  intended  executors — if  not  both — had  evil  designs  on  his 
estate,  and  that  he  had  taken  the  precaution  to  put  his  more  valuable 
papers  and  evidences  of  estate  into  a  certain  'tin  boK'  which  he  pointed 
out  to  the  witness,  and  that  he  wished  this  witness  to  observe  that 
it  was  'sealed'  and  directed  to  'The  Metropolitan  National  Bank  of 
the  City  of  New  York ;'  that  he  charged  it  as  his  dying  request  upon 
this  witness  that  she  would  keep  watch  over  his  executors,  to  see  that 
this  box  was  safely  consigned  to  said  'Metropolitan  National  Bank, 
in  said  City  of  New  York." 


This  statement  was  made  the  subject  of  consideration  in  the  Cabinet 
meeting  of  April  22,  A.  D.  1884,  Chester  A.  Arthur  being  President. 
At  the  conclusion  of  the  conference  in  relation  to  the  same  it  was 
agreed  between  this  affiant  (L.  C.  Blaisdell)  and  Secretary  Folger, 
on  behalf  of  the  Government,  that  the  said  Secretary  should  have  the 
neccjssary  authority  to  call  for  and  to  receive,  in  the  name  of  the 
said  Blaisdell,  the  said  "tin  box,"  if  the  same  could  be  found  in 
aforesaid  bank,  or  the  contents  or  any  part  of  the  contents  that  such 
box  might  have  contained ;  and  that  the  same  should  be  taken  pos- 
session of  by  the  Solicitor  of  the  Treasury  and  held  for  the  "joint 
use  and  benefit  of  the  heirs  at  law  of  Charles  Durkee  and  the  United 
States." 

In  the  presence  of  this  affiant  and  another  witness,  the  Solicitor 
of  the  Treasury,  about  the  year  and  during  the  month  of  August,  1888, 

179 


in  his  office,  stated  that  papers  of  the  character  described  in  the  above 
had  been  delivered  by  the  said  Metropolitan  Nation  Bank,  presumably 
so,  he  judged  from  the  circumstance  of  the  assignment  of  said  bank 
being  found  on  the  books  of  the  Solicitor,  and  containing,  ostensibly, 
"the  assignment  of  all  such  matters  as  were  designated"  by  the  order 
of  the  Secretary  of  the  Treasury  of  April  22,  A.  D.  1884.  This  affiant 
was  not  at  such  time  as  learned  in  the  law,  or  rules  and  regulations 
governing  the  Departments,  as  he  believes  himself  now  to  be,  and 
believes  that  the  very  attorney,  whom  he  had  with  him  to  assist  him, 
was  then  in  collusion  with  the  enemies  of  the  Government  and  the 
defendants  in  this  case,  No.  18,003,  to  prevent  affiant  from  seeing 
said  assignment  and  judging  for  himself  whether  it  contained  the 
matters  and  things  which  he  himself  and  the  Secretary  of  the  Treasury 
had  specified,  and  put  into  an  order  of  the  Secretary  of  the  Treasury 
that  it  should  contain,  to  wit,  the  private  papers  of  said  Durkee  that 
should  show  the  assignment  and  delivery  of  said  Durkee  by  Pacific 
railroad  corporations  designated  in  said  suit,  of  all  the  bonds  so  desig- 
nated in  the  petition  in  said  case. 

Affiant  here  again  states,  as  under  oath,  that  such  order  of  said 
Secretary  of  the  Treasury  was  to  contain  the  private  papers,  and  all 
the  private  papers,  whether  letters,  deeds,  bonds,  or  assignments  or 
other  character  of  evidences  of  indebtedness  to  Charles  Durkee  afore- 
said, which  had  at  any  time  come  into  the  possession  or  under  the 
control  of  the  said  Metropolitan  National  Bank  of  the  City  of  New 
York  aforesaid;  that  said  Secretary  made  the  proposition  to  receive 
from  affiant  such  character  of  orders  and  to  execute  the  same  at  once ; 
and  that  said  Secretary  left  the  room  with  the  last  words  on  his  lips 
which  affiant  ever  heard  him  utter,  saying,  "I  will  see  that  the  order 
is  at  once  transmitted  to  the  subtreasury  in  the  City  of  New  York." 

LEONARD  C.  BLAISDELL, 
Attorney  of  Record  of  Case  18,003,  Court  of  Claims. 

STATE  OF  INDIANA,     } 
County  of  Marion,      \ 

Subscribed  and  sworn  to  before  me,  the  undersigned  notary  public, 
in  and  for  the  aforesaid  County  and  State,  this  24th  day  of  May,  1895. 

JOHN  T.  PLUMMER, 

Notary  Public. 
In   the   Court   of    Claims.      L.    C.    Blaisdell    v.    The    United    States. 

180 


Applicant  for  rule  on  the  Secretary  of  the  Treasury  to  show  cause 
why  judgment  should  not  be  entered  against  the  United   States  and 
in  favor  of  the  petitioners  and  claimants  against  the  United  States. 
(Final  statement  of  Case  18,003.    In  Court  of  Claims.    L.  C.  Blaisdell 
v.  The  United  States.) 

This  case  was  brought  before  the  honorable  court  through  the  inter- 
vention of  the  Committee  on  Claims  of  the  Fifty-fourth  Congress, 
from  whose  files  it  will  appear  that  the  plaintiff  had  been  duly  pre- 
sented by  a  Member  of  that  Congress,  the  Hon.  William  M.  Springer 
of  the  State  of  Illinois. 

It  was  filed  in  the  first  instance  by  the  present  claimant,  L,.  C.  Blais- 
dell, in  behalf  of  not  only  the  heirs  at  law  of  the  descendant,  Charles 
Durkee,  but  in  behalf  of  all  creditors  of  the  lien  prior  and  paramount 
to  that  of  the  United  States,  as  designated  in  the  several  acts  of 
Congress,  1864,  1878,  and  of  the  act  of  March  3,  1887. 

Thus  it  appears  on  the  face  of  the  petition  that  it  was  a  claim  filed 
and  founded  upon  acts  of  Congress,  which  acts  were  in  the  petition 
definely  and  at  length  set  forth  in  form  and  substance,  and  made 
exhibits  for  the  purposes  of  conveying  to  the  mind  of  the  court  the 
foundation  upon  which  all  rights  claimed  by  the  complainants  in  the 
case  were  to  be  ascertained.  The  rights  of  the  complainants  whatever 
they  shall  be  ascertained  by  the  honorable  court  to  be  or  to  have  hereto- 
before  been,  are  fully  defined  in  the  Pacific  Railroad  laws  set  up,  desig- 
nated, and  plead  in  the  preliminary  and  informal  petition;  in  the 
more  complete  petition  following  on  the  case  or  matter  of  the  petition 
being  by  the  court  taken  for  consideration  as  in  ex  parte;  and  must 
finally  appear,  not  necessarily  from  any  or  all  of  the  answers  of  the 
several  Departments,  Bureaus,  and  officers  of  the  Government,  the  in- 
formation thereby  conveyed  to  the  court,  but  through  the  information 
conveyed  to  the  mind  of  the  court  through  statutes  of  the  United 
States,  and  specific  acts  of  Congress  defining  the  particular  rights  and 
character  of  rights  set  up  and  appearing  in  this  petition. 

It  will  only  be  necessary  to  merely  call  the  attention  of  this  honorable 
court  to  the  acts  of  Congress  that  have  been  duly  presented  to  it  as 
the  authority  for  bringing  this  claim  against  the  United  States,  to 
complete  all  the  testimony  in  support  of  the  claim  herein  presented 
that  can  be  required  of  the  complainants  in  the  case  to  present. 

The  information  that  has  been  filed  with  this  honorable  court  by 
the  attorney  of  record  in  the  case— and  that  particular  portion  of  it 

181 


which  classifies  as  "official  matter,0  certified  by  the  several  Depart- 
ments, Bureaus,  and  officers  of  the  Government — disclose  a  state  of 
facts  which  precludes  the  possibility  of  there  being  hereafter,  at  any 
time,  by  or  through  any  Department,  Bureau,  or  officer  of  the  Govern- 
ment, a  state  of  facts  to  it  presented  that,  shall  run  counter  to  or  in 
any  material  from  modify  the  conclusions  which  the  court  may  draw 
from  that  which  has  been  already  thus  presented. 

A  summary  of  these  facts  thus  presented,  and  that  have  been  on  file 
with  this  honorable  court  for  the  greater  part  of  the  two  years  last 
preceding  the  present  date,  shows  to  the  honorable  court  all  the  essen- 
tial information  necessary  that  it  shall  have  obtained  before  proceed- 
ing to  enter  final  judgment  in  the  cause  of  the  complainants  versus 
the  United  States. 

As  they  embrace  a  large  part  of  the  history  of  the  Pacific  railroad 
system,  their  operations,  duties,  and  obligations  were  as  expressed 
in  the  United  States  statutes;  and  so  great  a  portion  of  the  detailed 
information  is  to  be  conveyed  to  the  court  through  official  reports  of 
the  Auditor  of  Railroad  Accounts  in  the  first  instance  and  Railroad 
Commissioner's  reports  in  the  latter  instances,  it  is  deemed  in  order 
to  present  first  the  annual  report  of  the  Auditor  of  Railroad  Accounts 
to  the  Secretary  of  the  Interior  for  the  year  ending  June  30,  1878. 

On  page  6  of  this  report  occur  the  words : 

"The  act  of  Congress  approved  May  7,  1878  (chap.  96,  p.  56,  Statute 
II,  1877-78),  entitled  'An  act  to  alter  and  amend  an  act  entitled  "An 
act  to  aid  in  the  construction  of  a  railroad  and  telegraph  line  from 
the  Missouri  River  to  the  Pacific  Ocean,  *  *  *  approved  1862," ' 
*  *  *  and  'to  alter  and  amend  act  of  1864,'  in  amendment  "of  said 
first-named  act  requires: 

"That  the  net  earnings  of  said  act  of  1862,  of  said  railroad  com- 
panies, respectively,  the  Central  Pacific  Railroad  Company  of  Cali- 
fornia and  the  Union  Pacific  Railroad  Company  shall  be  ascertained 
by  deducting  from  the  gross  amount  of  their  earnings,  respectively, 
the  necessary  expenses  paid  within  the  year  in  operating  the  same  and 
keeping  the  same  in  a  state  of  repair,  and  also  the  sum  paid  by  them, 
respectively,  within  the  year  in  discharge  of  interest  on  their  first- 
morgage  bonds." 

On  the  first  proposition,  to  wit,  the  amount  paid  by  these  companies 
"within  any  given  year  in  operating  their  railroad  and  telegraph  lines, 
and  in  keeping  the  same  proposition,  namely,  'with  the  amount  paid 

182 


by  them,  respectively,  within  the  year  or  at  any  other  time,  in  dis- 
charge of  interest  on  their  first-mortgage  bonds/  with  this  'proposi- 
tion we  do  propose  to  deal." 

It  is  made  the  basis  of  the  rights  set  up  by  the  complainants  against 
the  United  States  that  the  interest  accrued  upon  these  first-mortgage 
bonds,  to  wit : 

Union  Pacific  $27,236,512.00 

Central    Pacific    25,885,120.00 

Denver  Pacific  Railroad  &  Telegraph  Co.   (Western  Pa- 
cific)      1,970,560.00 

Knasas  Pacific  1,600,000.00 

Central   Branch  Union   Pacific   Railroad   Company 1,600,000.00 

Sious  City  and  Pacific  Railroad  Company 1,628,320.00 

A  total  first-mortgage  debt  and  indebtedness  of  lien  prior  and  para- 
mount to  that  of  the  United  States  of  $64,623,512,  with  interest  accrued 
thereon  at  the  rate  of  6  per  cent  per  annum,  was,  until  the  dates,  re- 
spectively, March  3,  A.  D.  1883,  and  January  1,  A.  D.  1885,  the  debt 
and  the  expressed  indebtedness  of  these  railroad  and  telegraph  com- 
panies, jointly  and  severally,  to  such  parties  and  persons  as  were 
expressed  and  designated  in  "certain  files  and  records  of  the  Treasury 
Department,"  and  which  were  referred  to  in  these  terms  by  Hon. 
William  Lawrence,  First  Comptroller  of  the  Treasury,  in  Comptroller's 
Decision  by  said  William  Lawrence,  under  the  date  of  December  3, 
A.  D.  1884,  and  at  such  date  became,  by  contract,  an  indebtedness  of 
the  United  States. 

That  the  names  of  "the  lawful  and  just  holders  of"  the  said  "lien 
prior  and  paramount  to  that  of  the  United  States"  have  not  appeared 
of  record  within  the  knowledge  of  this  honorable  court,  and  have 
never  yet  been  produced  (so  far  as  known)  before  any  committee  of 
either  House  of  Congress,  not  reported  in  any  railroad  report  required 
by  law  to  have  contained  them,  constitutes  no  evidence,  and  no  rebuttal 
of  the  testimony  that  first-mortgage  creditors  answering  to  that  descrip- 
tion and  of  such  character  of  lien  have  been  so  well  provided  with 
protection  in  the  expressed  provisions  of  the  acts  of  Congress — 1864, 
1878,  and  1887 — that  the  very  "liens"  or  incumbrances  thus  openly  recog- 
nized by  such  character  of  mortgages  in  the  Department  of  the  Treas- 
urv  and  the  Department  of  the  Interior,  both  of  which  said  Depart- 


183 


merits  contain  the  most  conclusive  evidence  and  recorded  proofs  that 
such  bonds  do  exist.  • 

The  Departments  just  named  have,  it  is  true,  failed  to  produce  the 
"evidence  called  for  by  the  complainants  in  the  first  instance,  and  by 
the  honorable  court  in  the  second  instance,  that  such  mortgage  bonds 
do  exist;  but  these  acts  of  Congress  just  referred  to,  more  especially 
the  preamble  to  the  act  cff  May  7,  1878,  declare  that  the  Union  Pacific 
Railroad  Company  named  in  this  and  the  other  said  acts  of  Congress, 
and  the  Central  Pacific  Railroad  Company,  and  others  therein  named, 
"did  and  have  issued"  an  amount  of  "their  own  bonds"  equal  to  the 
amount  so  issued  (as  therein  expressed)  to  them,  and  each  of  them, 
by  the  United  States." 

"  Furthermore,  rights  of  owners  of  bonds  thus  issued  are  not  in  law 
or  equity,  to  be  defeated  by  the  neglect  and  refusal  of  the  said  several 
Departments,  or  any  officer,  bureaus,  or  heads  of  such  Departments 
to  make  and  preserve  proper  "files  and  records"  of  the  various  transac- 
tions that  may  have  occurred  in  either  one. 

In  pleading  for  the  protection  of  the  rights  of  this  class  of  creditors 
of  the  United  States,  I  shall  submit  for  the  consideration  of  the  hon- 
orable court  the  general  proposition  that  rights  thus  guaranteed  by  acts 
of  Congress  are  not  to  be  defeated  by  "the  neglect  and  refusal  of 
officers  of  the  Government"  ("more  particularly  the  heads  of  the  two 
Departments  last  named)  to  keep,  preserve  for  the  use  of  this  court, 
and  to  present  the  true  and  perfect  record  of  such  transactions  occur- 
ring therein  as  have  involved  the  credit  of  the  United  States  to  the 
total  amount  named  in  the  said  Pacific  Railroad  bonds." 

The  truth  of  this  last  proposition,  I  believe,  is  not  questioned  by 
any  head  of  any  Department  of  the  Government  so  far  as  I  have  yet 
been  informed,  to  wit,  the  records  of  the  Treasury  Department  do 
disclose  the  "public-debt  statement;  that  all  interest  accrued  upon  the 
said  bonds  are  payable  by  the  United  States."  To  whom  payable 
is  not  disclosed.  That  the  principal  of  the  bonds  ($64,623,512)  is 
also  "payable  by  the  United  States."  To  whom  payable  is  not  disclosed. 

Nor  is  it  disclosed  (by  record  or  information  to  Congress  given) 
when,  in  the  history  of  these  bonds,  that  portion  of  them  became  due 
and  payable  which  represented  "interest  indebtedness  accrued  for  the 
period  of  time  which -intervened  between  issue  of  the  principal  bonds 
and  the  date  of  April  22,  1884."  The  plaintiff  in  the  case  has  alleged 
the  fact  of  the  transposition  of  a  specific  and  well-defined  and  ex- 


184 


pressed  indebtedness  of  these  corporations  into  an  indebtedness  of 
these  corporations  into  an  indebtedness  of  the  United  States.  The 
Treasury  Department  corroborates  the  fact  states,  that  such  indebted- 
ness has  become  the  indebtedness  of  the  United  States,  but  does  not 
show  when  it  so  became  (debt  payable  by  the  United  States). 

The  Interior  (Railroad  Department  thereof)  carries  the  same  debt 
account  under  the  title  or  name  of  "bond  indebtedness,"  and  charges 
the  same  item  against  the  United  States  as  such,  which  the  Treasury 
Department  terms  a  cash  and  "sinking-fund  indebtedness."  The  in- 
formation is  thus  disclosed  to  the  honorable  court  that  there  is  a  vast 
discrepancy  between  the  "public-debt  statement  of  the  Secretary  of  the 
Treasury  and  that  disclosed  in  the  Department  of  the  Interior.  The 
sinking  fund  as  shown  by  the  Commissioner  of  Railroads  does  not 
show  to  exceed  $27,000,000  (less  that  $20,000,000  in  1884).  While  the 
Treasury  Department  (unless  the  Pacific  Railroad  Committee,  under 
Mr.  Outhwaite,  have  misstated)  shows  $64,000,000  of  "sinking-fund 
indebtedness  of  the  Government,"  by  reason  of  these  Pacific  Railroad 
obligations,  in  addition  to  that  shown  in  the  Department  of  the 
Interior. 

To  prove  that  there  is  a  gigantic  discrepancy  and  erroneous  state- 
ment of  the  public  liabilities  in  this  respect,  as  between  these  two 
Departments,  the  honorable  court  has  but  to  summon  Mr.  Outhwaite 
as  a  witness,  who,  with  13  other  members  of  that  committee  (in  1888), 
declared  "that  the  amount  of  $64,623,512  in  cash"  was,  on  the  1st  day 
of  January,  1885,  an  "outstanding  liability"  of  the  Government,  by 
reason  of  that  amount  of  cash  having  been  on  that  date  deposited 
with  the  Secretary  of  the  Treasury  "for  the  defintiely  ascertained  in- 
debtedness of  these  several  Pacific  railroad  companies  to  their  lawful 
creditors"  of  the  lien  prior  and  paramount  to  that  of  the  United  States. 

If  the  liability  of  the  United  States — or  my  statement  of  its  liability 
in  this  respect,  and  as  alleged  in  my  petition,  both  the  original  and  the 
amended — has  been  disputed  by  an  answer,  plea,  or  demurrer  filed  with 
this  honorable  court,  I  am  as  yet  not  made  aware  of  the  fact.  The 
statement  has  gone  before  the  Department  of  the  Treasury,  signed  and 
sworn  to  as  set  forth  in  my  affidavits,  and  stands  unchallenged,  so 
far  as  I  know. 

The  order  of  the  court  for  the  information  that  would  deny  the 
truth  of  the  statement  has  gone  forth  and  does  not  bring  the  in- 
formation that  would  deny  it. 

185 


The  statement  has  stood  in  form  and  in  print  before  the  eyes  of 
every  Secretary  of  the  Treasury  from  the  date  of  January  12,  1889, 
and  not  one  has  attempted  to  deny  it  or  make  any  official  answer 
tending  to  deny  the  truth,  substantially,  of  my  statements,  as  in  peti- 
ion  contained.  The  President  of  the  United  States  (Benjamin  Harri- 
son, while  Chief  Executive)  caused  all  my  statements  to  be  placed 
before  himself,  in  official  capacity,  and  in  official  capacity  referred 
them  "for  the  official  action"  (note  the  words)  of  the  Secretary  of 
the  Treasury.  The  Supreme  Court,  in  99  United  States  Reports, 
supports  the  statement  of  my  petition,  that  the  United  States  is  debtor 
to  the  "sinking  fund"  and  in  favor  of  "the  lawful  and  just  holders 
of  paramount  lien,"  as  stated,  "to  the  full  amount  of  the  deposits 
made  under  the  provisions  for  'such  sinking  fund  as  contained  in  the 
act  of  May  7,  1878."  The  committee  referred  to  last  has  the  in- 
formation that  the  sum  of  $64,623,512  is  and  has  been  withheld  from 
"the  possession  of  the  lawful  and  just  holders  of  such  paramount  lien 
by  each  and  every  Secretary  of  the  Treasury,  on  the  plea  or  notion, 
rather,  that  such  officer  held  a  discretionary  authority  to  make  of  such 
fund  a  sinking  fund." 

Congress,  by  act  of  March  3,  1887,  directed  that  officer  "to  clear  off 
such  paramount  lien  or  incumbrance  by  payments  (by  payments,  mark 
the  words)  out  of  the  sinking  fund,"  and  provided  that  the  entire 
amount  be  paid,  whether  the  sinking  fund  was  more  or  less  than  the 
amount  due  to  the  lawful  owners  of  such  bonds,  or  the  "lawful 
creditors  of  the  paramount  lien  aforesaid." 

For  this  disobedience  of  the  requirement — the  direct,  positive,  and 
special  order  of  Congress — the  present  incumbent  in  that  office  is 
answerable.  He  can  not  and  does  not  answer  either  Congress  or  this 
honorable  court  that  he  knows  not  the  lawful  creditors  of  the  United 
States ;  that  he  has  no  legal  knowledge  of  them  that  he  is  bound  by 
law  to  take  cognizance  of. 

He  appears  to  rest  contentedly  upon  "want  of  information,  such 
information  as  would  create  an  official  liability  on  his  part  to  answer" 
the  demands  made  by  me  on  the  United  States  Treasury.  He  acts, 
or,  rather,  neglects  to  act,  and  rests  upon  the  assumption  that  his 
neglect  and  refusal  to  answer  me  in  official  manner,  either  by  affirma- 
tion or  by  denial  of  the  claims  I  have  filed,  prevents  the  consumma- 
tion of  my  purpose  to  enforce  an  accounting  from  him;  and  he  acts 
as  if  he  expected  that  the  entire  body  of  Congress  and  the  Supreme 


186 


Court,  including  this  honorable  court,  would  unitedly  be  unable  to 
compel  him  either  to  affirm  or  deny  my  right  to  an  accounting,  and 
thus  prevent  not  only  myself  and  my  clients  from  obtaining  the  benefits 
of  those  acts  of  Congress  upon  which  we  rely  for  protection,  but  that 
all  possible  creditors  of  such  lien,  as  Congress  provided,  should  be 
secured  to  "its  lawful  holders"  (should  others  than  myself  and  clients 
prove  to  be  "the  lawful  beneficiaries"),  would  be  powerless,  and  the 
courts  named,  and  Congress  itself,  be  powerless  to  enforce  against 
his  will  the  payment  of  the  sums  due. 

\Yith  these  statements  I  have  concluded  to  include  the  following 
motion :  That  the  Secretary  of  the  Treasury  be,  and  with  the  approval 
of  this  honorable  court,  is  hereby,  ordered  to  show  cause,  by  his  per- 
sonal appearance  before  this  honorable  court,  at  the  next  ensuing- 
rule  day,  why  judgment  should  not  be  rendered  in  behalf  of  the  peti- 
tioners and  claimants  in  said  case  and  cause,  No.  18,003,  in  accordance 
with  the  statement  of  claims  against  the  United  States  made  to  this 
honorable  court. 

Very  respectfully  submitted  by 

Attorney  of  Record  in  Case  No.  18,003. 

To  the  Honorable  Chief  Justice  and  Judges  thereof. 

(In  the  Court  of  Claims  of  the  United  States.  Term  1894-1895. 
Leonard  C.  Blaisdell,  attorney  in  fact,  etc.,  et  al.,  v.  The  United  States. 
No.  18,003.  Filed  March  6,  1895.) 

AMENDED   PETITION. 

The  claimants,  Leonard  C.  Blaisdell,  attorney  in  fact  for  the  follow- 
ing named  heirs  at  law  of  Charles  Durkee,  late  a  citizen  of  the  United 
States,  now  deceased,  to  wit : 

George  Durkee,  Joseph  Durkee,  Charles  C.  Durkee,  Harvey  Durkee, 
Martha  K.  Durkee,  Bessie  Durkee,  John  Durkee,  Charles  E.  Durkee, 
Harriet  Fluent,  Mary  L.  Hendrix,  Caroline  C.  Johnson,  Charles  L. 
Boardman,  Harriet  Boardman,  Henry  Boardman,  Jessie  H.  Moneghan, 
May  A.  Fargo,  Ellen  Church,  Mary  L.  Furness,  Laura  A.  Huntington, 
Louiza  Hoag,  and  Harriet  L.  Blaisdell  (who  is  the  wife  of  Leonard  C. 
Blaisdell),  for  their  amended  petition  herein  say: 

I. 

That  they  are  all  citizens  of  the  United  States;  that  their  said  attor- 

187 


ney  in  fact  resides  at  Champaign,  in  the  State  of  Illinois ;  that  they  are 
the  sole  and  only  heirs  at  law  of  said* Charles  Durkee,  deceased;  that 
they  and  their  said  attorney  in  fact  have  always  yielded  true  allegiance 
to  the  United  States,  and  that  they  are  the  sole  owners  of  the  claim 
herein  sued  upon. 


II, 

That  the  said  Charles  Durkee,  during  his  life,  was  lawfully  possessed 
and  was  the  owner  of  certain  prior  and  paramount  lien  bonds  of  the 
Union  and  Central  Pacific  railroad  companies,  which  bonds  had  been 
issued  by  said  companies  through  their  officers  and  agents  in  the 
construction  and  equipment  of  said  railroads,  and  which  bonds  were 
of  the  value  and  amount  of  sixty-four  million  six  hundred  and 
twenty-three  thousand  five  hundred  and  twelve  dollars  ($64,623,512.00) 
and  that  said  bonds  subsequently  were  deposited  in  the  Treasury 
Department  of  the  United  States,  or  in  a  sub-treasury,  to  be  held  by 
the  United  States  in  trust  for  the  use  and  benefit  of  the  owners 
thereof,  and  their  payment  was  guaranteed  by  the  Government  of  the 
United  States,  and  the  claimants  say  that,  by  virtue  of  being  the 
heirs  at  law  of  said  decedent,  and  by  virtue  of  the  premises,  they 
became  at  his  decease  the  lawful  owners  of  the  bonds  aforesaid. 


III. 

That  the  Government  of  the  United  States,  pursuant  to  law,  col- 
lected of  and  from  the  said  Union  and  Central  Pacific  railroad  com- 
panies the  said  sum  of  sixty-four  million  six  hundred  and  twenty- 
three  thousand  five  hundred  and  twelve  dollars  ($64,623,512.00)  ;  and 
now  holds  the  same  for  the  protection,  security,  and  benefit  of  the 
lawful  and  just  holders  of  any  mortgage  or  lien  of  such  companies, 
respectively,  lawfully  paramount  to  the  rights  of  the  United  States, 
but  the  United  States,  having  neglected,  failed,  and  refused  to  pay 
the  same  over  to  these  claimants  as  the  heirs  at  law  of  said  decedent, 
and  who  are  the  lawful  owners  of  said  bonds,  and  are  lawfully  and 
justly  entitled  to  the  sum  of  mony  aforesaid,  although  often  re- 
quested so  to  do  by  the  claimants,  and  that,  notwithstanding  the 
premises,  that  sum  is  now  retained  in  the  Treasury  or  in  a  sub- 
treasury  of  the  United  States. 

188 


IV. 

And  the  claimants  say  that  they  are  justly  entitled  to  the  sum  afore- 
said on  account  of  said  bonds  and  of .  the  premises  hereinbefore 
stated,  and  that  the  said  sum  is  justly  due  and  owing  to  them  from  the 
United  States,  and  is  wholly  unpaid. 

V. 

And  the  claimants  further  say  that  they  have  made  the  allega- 
tions in  their  said  amended  petition  as  specific  and  accurate  as  they 
are  able  to  do  from  the  data  in  their  possession,  the  accurate  and 
specific  information  therein  being  in  possession  of  the  defendant, 
and  they  wish  to  reserve  their  right  to  further  amend  said  petition 
should  the  allegations  herein  be  properly  amendable  in  the  light  of 
further  information. 

\\~herefore  the  claimants  demand  judgment  against  the  United  States 
in  the  sum  of  sixty-four  million  six  hundred  and  twenty-three  thou- 
sand five  hundred  and  twelve  dollars  ($64,623,512.00),  and  all  proper 
relief  in  the  premises. 

LEONARD    C.    BLAISDEIX, 
Attorney  in  Pact  and  One  of  the  Petitioners. 

TOTAL  INDEBTEDNESS  OF  BOND-AIDED  COMPANIES  TO 
UNITED  STATES. 

The  total  indebtedness  of  the  several  bond-aided  companies  to  the 
United  States  on  June  30,  1896,  was  as  follows  : 

Union  Pacific,  including  Kansas  Pacific,  principal  of  bonds  issued, 
$33,539,512,  on  which  interest  has  accrued  to  the  amount  of  $57,071,- 
757.46,  on  this  there  should  be  credited  $38,611,070.53  applied  to  the 
bond  and  interest  and  sinking-fund  accounts,  leaving  the  balance  of 
debt  on  the  above  date  $52,000,198.93. 

Central  Pacific,  including  Western  Pacific,  principal  of  bonds  issued, 
$27,855,680;  interest  accrued,  $46,593,478.98;  credits,  $16,167,149.56; 
balance  of  debt,  $58,282,009.42. 

Sioux  City  and  Pacific,  principal  of  bonds,  $1,628,320;  interest 
accrued,  $2,734,387.09;  credits  on  account  of  transportation,  $246,- 
(;:>!*. 49 ;  balance  of  debt,  $4,116,047.60. 

Central  Branch  Union  Pacific,  principal  of  bonds  issued,  $1,600,000; 

189 


accrued   interest,   $2,778,608.26;    credits,   $642,884.88;    balance   of    debt, 
$3,735,723.38. 

Under  a  decision  of  the.  Supreme  Court  the  interest  paid  on  these 
bonds  by  the  United  States  does  not  ftecome  due  from  the  companies 
until  the  maturity  of  the  bonds.  Up  to  June  30,  1896,  there  had  ma- 
tured subsidy  bonds  in  the  following  amounts : 

January  16,  1895,  Central  Pacific  Railroad  Company $2,362,000 

January   1,   1896,   Central   Pacific  Railroad   Company 1,600,000 


$3,962,000 
November  1,  1895,  Kansas  Pacific  (now  Kansas'  Division 

Union  Pacific)  640,000 

January  1,  1896,  Kansas  Pacific  (now  Kansas  Division 

Union  Pacific) 1,440,000 

February  1,  1896,  Union  Pacific 4,320,000 


6,400,000 

January  1,  1896,  Central  Branch  Union  Pacific  Railroad 640,000 

3,962,000 


Total    $11,002,000 


100 


CHAPTER  9 


From  Annual  Report  of  Attorney-General  for  Year  1898. 

EXHIBIT  W,  REPORT  OF  THE  SPECIAL  COUNSEL 
FOR  THE  UNITED  STATES  IN  THE  CASES 
AGAINST  THE  UNION  PACIFIC  AND  KANSAS 
RAILWAYS. 

Omaha,  Nebr.,  October  15,  1898. 
Hon.  John  W.  Griggs, 

Attorney-General,  Washington,  D.  C. 

Dear  Sir:  In  compliance  with  your  telegraphic  request  to 
submit  as  soon  as  possible  report  of  proceedings  for  the  year 
in  the  cases  against  the  Union  Pacific  and  Kansas  Pacific  rail- 
ways, I  have  the  honor  to  submit  the  following  report  on  be- 
half of  Hon.  George  Hoadly,  leading  counsel  in  these  matters, 
and  myself,  acting  under  the  direction  of  yourself  and  your 
predecessor. 

In  the  last  report  of  Gov.  Hoadly,  dated  November  16,  1897, 
occurs  the  following: 

Thus,  as  far  as  the  main  line  is  concerned,  this  important  liti- 
gation has  happily  ended  to  the  great  advantage  of  the  Gov- 
ernment, which  will  be  reimbursed  in  full  for  all  its  advances 
by  way  of  subsidy  to  the  Union  Pacific  Railroad  Company, 
with  interest  at  6  per  cent  per  annum. 

This  has  reference  to  the  main  line  extending  from  Council 
Bluffs  to  the  western  terminal  point,  5  miles  beyond  Ogden. 

191 


With  reference  to  the  Kansas  Division  in  Kansas  and  Missouri 
the  same  report  contains  the  following  statement : 

The  sale  of  the  Kansas  Division  in  Kansas  and  Missouri  now 
stands  postponed  until  the  15th  day  of  December  next. 

Upon  application  made  to  Judge  Sanborn, .  December  13, 
1897,  on  the  part  of  the  United  States,  the  sale  of  the  Kansas 
Pacific  Division  was  postponed  for  a  period  of  not  less  than 
sixty  days,  and  thereafter  W.  D.  Cornish,  master  in  chancery, 
advertised  the  sale  under  the  Government  decree  to  take  place 
at  Topeka,  Kansas,  on  the  16th  day  of  February,  1898. 

As  the  guarantee  of  the  reorganization  committee  to  bid 
$45,754,059.99,  which  was  afterwards  increased  to  $50,000,000, 
has  reference  to  both  the  main  line  and  the  fCansas  Division, 
and  as  the  main  line  itself  realized  the  full  amount  of  the  Gov- 
ernment lien  and  claim  thereon,  $58,448,223.75,  it  was  thought 
that  the  only  provision  regulating  a  bid  with  respect  to  the 
Kansas  Division  was  that  provided  by  the  decree,  a  copy  of 
which  is  in  the  files  of  your  office.  This  was  not  deemed  ade- 
quate protection  to  the  Government. 

On  the  8th  day  of  February,  1898,  under  the  power  vested 
in  the  President  by  an  act  of  Congress,  entitled  "An  act  author- 
izing the  investigation  of  the  book  accounts  and  methods  of 
railroads  which  have  received  aid  from  the  United  States,  and 
for  other  purposes,"  passed  March  3,  1887,  President  McKin- 
ley  issued  an  Executive  order  which  after  reciting  among 
other  things  as  follows :  "Whereas,  in'  the  opinion  of  the 
President,  it  is  deemed  necessary  to  the  protection  of  the 
interest  and  preservation  of  the  security  of  the  United  States 
in  respect  of  its  said  lien  and  mortgages  to  redeem  and  clear 
off  the  aforesaid  paramount  liens  and  incumbrances  by  paying 
the  sums  lawfully  due  in  respect  thereof  out  of  the  Treasury,  so 
that  the  United  States  shall  thereupon  become  and  be  subro- 

192 


gated  to  all  rights  and  securities  heretobefore  pertaining  to 
liens  and  mortgages  in  respect  of  which  such  payments  shall 
be  made,"  authorized  the  Secretary  of  the  Treasury  to  pay 
out  of  the  Treasury  to  the  person  or  persons  lawfuly  entitled 
to  receive  the  same  the  amounts  lawfully  due  upon  the  prior 
mortgages  upon  the  Eastern  and  Middle  Division  of  said  rail- 
road out  of  any  money  in  the  Treasury  not  otherwise  appro- 
priated 

Thereafter,  under  your  direction,  a  petition  was  prepared  to 
be  presented  to  Judge  Sanborn,  offering  to  redeem  prior  liens 
in  such  manner  as  the  court  should  direct,  and  praying  that 
thereupon  the  United  States  be  held  to  be  subrogated  to  all  the 
rights  of  said  prior  lien  holders,  and  that  a  receiver  be  ap- 
pointed to  take  possession  of  the  mortgaged  premises  and 
maintain  and  operate  the  same  until  Congress  or  the  court 
otherwise  provided,  and  that  the  sale  fixed  for  February  16, 
1898,  be  postponed 

In  order  to  further  protect  the  United  States  you  caused  the 
necessary  deposit  to  be  made  with  W  D.  Cornish,  master  in 
chancery,  to  qualify  the  United  States  as  a  bidder  at  the  sale, 
should  that  course  become  necessary,  or  be  deemed  advisable. 

On  the  12th  day  of  February,  1898,  Governor  Hoadly  and 
myself  went  to  St.  Louis  for  the  purpose  of  presenting  to 
Judge  Sanborn  the  foregoing  petition  under  instructions  con- 
tained in  your  letter  of  February  9,  1898.  We  also  received 
from  you  a  Treasury  draft  for  $7,515,255.15,  indorsed  "pay- 
able to  the  order  of  Hon.  Walter  H.  Sanborn,  judge,"  for  the 
purpose  of  redemption  of  prior  liens,  if  necessary.  In  this  let- 
ter you  stated  that  in  the  opinion  of  the  President,  in  which 
you  concurred,  if  a  bid. to  the  Government  could  be  assured  of 
the  principal  of  the  Government  debt,  viz :  $6,303,000,  the  ap- 
plication for  leave  to  redeem  should  be  discontinued,  and  in- 


structed  us  that,  if  the  reorganization  committee  would  agree 
in  a  binding  manner,  satisfactory  to  us,  by  which  the  Govern- 
ment would  be  assured  of  a  bid  at  the  sale  sufficient  to  realize 
the  principal  of  the  Government  claim,  that  we  discontinue  the 
proceedings  to  redeem  and  allow  the  sale  to  proceed  as  ad- 
vertised. 

Shortly  before  the  time  for  presentation  of  the  petition  to 
the  court  we  came  to  an  agreement  with  the  reorganization 
commitee,  represented  by  Winslow  S.  Pierce,  satisfactory  to 
us,  that  a  bid  of  $6,303,000  would  be  made  at  the  sale,  if  the 
sale  would  be  permitted  to  go  on  at  the  time  advertised. 

Announcement  of  this  agreement  was  made  in  open  court 
and  the  sale  was  permitted  to  proceed,  and  did  proceed  as  ad- 
vertised, when  a  bid  was  made,  according  to  agreement,  which 
realized  to  the  United  States  the  sum  of  $6,303,000 ;  sale  was 
thereafter  confirmed  and  the  purchase  money  paid  into  the 
Treasury  of  the  United  States.  The  Government  thus  realized 
by  the  foreclosure  and  the  sale  of  the  main  line  and  the  Kan- 
sas Division  the  sum  of  $64,751,233.75,  being  an  increase  of 
$17,997,163.76  over  the  first  guarantee  bid  tendered  by  the  re- 
organization committee. 

There  then  remained  due  the  Government  the  unpaid  inter- 
est of  the  Kansas  Division  debt.  On  the  2cl  day  of  April,  1898, 
I  filed  in  the  Circuit  Court  of  the  United  States  for  the  eighth 
circuit  and  district  of  Kansas,  the  court  of  primary  jurisdic- 
tion, a  petition  for  a  deficiency  decree  for  the  sum  of 
$6,588,900.19,  being  the  amount  of  said  unpaid  interest  to- 
gether with  interest  thereon.  The  Union  Pacific  Railway  Com- 
pany answered  this  petition,  denying  the  right  of  the  United 
States  to  a  deficiency  decree  against  the  Union  Pacific  Railway 
Company,  contending,  in  substance,  that  it  did  not  assume  to 
pay  or  become  liable  for  the  debts  of  the  Kansas  Pacific  Rail- 

194 


way  by  its  articles  of  union  and  consolidation  with  that  com- 
pany or  otherwise ;  and  that,  on  the  contrary,  by  the  articles  of 
union  and  consolidation  it  was  expressly  provided  that  the 
Union  Pacific  Company  should  not  assume  the  debts  and  lia- 
bilities of  the  constituent  companies. 

Such  proceedings  were  thereafter  had  that  on  the  3d  day  of 
May,  1898,  the  matter  came  on  hearing  before  Judge  Sanborn, 
in  St.  Paul,  Minn.,  when  it  was  ordered  that  the  petition,  an- 
swers, and  issue  be  referred  to  W.  D.  Cornish,  special  master, 
to  hear,  investigate,  determine,  and  report. 

On  the  14th  day  of  February,  1898,  upon  application  of  the 
receivers  in  the  original  Ames  case,  Judge  Sanborn  made  an 
order  which  provided,  among  other  things,  that  all  persons  who 
claimed  any  interest  in  or  lien  upon  any  of  the  funds  or  prop- 
erty in  the  hands  of  such  receivers,  as  their  creditors  or  as 
creditors  of  the  Union  Pacific  Railway  Company,  file  their 
respective  claims  with  William  D.  Cornish,  the  special  master, 
at  Omaha,  on  or  before  the  first  day  of  July,  1898,  and  that  any 
party  to  the  suits,  or  who  filed  a  claim  in  accordance  with  the 
order,  might  file  an  answer  to  the  claim  of  any  other  party 
within  thirty  days  after  July  1,  1898,  and  contest  such  claim. 

No  further  action  was  taken  with  respect  to  the  petition 
for  a  deficiency  decree,  for  the  reason,  among  others,  that 
should  the  claim  be  allowed  it  would  still  be  necessary  to  file 
the  same  under  the  foregoing  order  and  contest  the  right  of 
the  United  States  to  an  interest  in  the  funds  or  property  in  the 
hands  of  the  Union  Pacific  Railway  Company  receivers. 

Within  the  time  provided  by  this  order  I  filed  the  claim  of 
the  United  States  with  the  master,  seting  forth  the  facts  upon 
which  the  same  was  based,  claiming  the  same  amount  as  above 
stated  in  the  petition  for  a  deficiency  decree. 

A  large  number  of  claims,  aggregating  a  great  amount,  have 

195 


been  filed  with  the  master  under  the  foregoing  order,  and 
nearly  every  claimant  has  filed  answer,  contesting  the  right  of 
every  other  claimant.  These  matters  are  still  pending,  but  little 
testimony  having  been  thus  far  taken.  It  is  my  intention  at 
present  to  go  to  New  York  next  Monday  to  make  arrangements 
for  taking  testimony  in  the  matter  of  the  claim  of  the  United 
States,  and  also  in  support  of  the  contention  of  the  United 
States  in  its  answer  made  to  other  claims.  I  hope  to  close  this 
matter  up  before  the  end  of  the  year. 

In  the  investigation  of  the  claims  filed  as  above  stated  1 
learned  for  the  first  time  that  on  or  about  the  1st  day  of  July, 
1886,  the  Union  Pacific  Railway  Company  executed  and  de- 
livered to  the  American  Loan  and  Trust  Company,  as  trustee, 
a  certain  deed  of  trust  known,  as  termed,  "Further  security 
trust,"  wherein  and  whereby  the  railway  company  covenanted 
to  pay  over  to  said  trustee  certain  moneys,  or  to  deliver  to  it 
certain  mortgage  bonds  of  branches  or  extensions  of  the  rail- 
road of  the  Kansas  Pacific  Railway  Company  or  of  roads  con- 
nected with  the  Kansas  Pacific  system  or  controlled  by  owner- 
ship of  stock,  said  moneys  or  bonds  to  be  held  by  the  trustee 
thereby  created  for  the  benefit  and  further  security  of  the  first- 
mortgage  bonds  of  the  Kansas  Pacific  Railway  Company,  hav- 
ing priority  over  the  lien  of  the  United  States  for  subsdiy 
bonds  issued  to  the  Kansas  Pacific  Railway  Company,  and  for 
the  benefit,  protection,  and  further  security  of  the  United 
States  in  respect  of  said  subsidy  bonds  and  interest  thereon, 
and  also  for  the  benefit,  protection,  and  further  security  of  the 
consolidated  mortgage  bonds  secured  by  a  mortgage  of  May 
1,  1879. 

From  time  to  time  there  was  deposited  with  said  trustee, 
under  said  trustee  securities  as  follows : 
Omaha  and  Republican  Valley  Railway  Company 

196 


consolidated  mortgage  bonds $636,000 

Junction  City  and  Fort  Kearney  Railway  Company 

first-mortgage  branch  bonds   171,000 

Colorado  Central  Railroad  Company  first-mortgage 

bonds 197,000 

Union  Pacific,  Lincoln  and  Colorado  Railway  Com- 
pany first-mortgage  bonds   74,000 

Kansas     Pacific     Railway     Company     consolidated 

mortgage   bonds    116,000 

Union  Pacific,  Denver  and  Gulf  Railway  Company 

consolidated  mortgage  bonds    149,000 

Provision  is  made  in  said  trust  deed  for  the  sale  and  ex- 
change from  time  to  time  of  the  securities  so  deposited,  and 
that  such  sales  may  be  made  at  any  time  it  shall  be  deemed  ad- 
visable by  the  Union  Pacific  Railway  Company. 

On  the  27th  day  of  June,  1898,  said  trustee  filed  its  bill  of 
complaint  in  equity  in  the  circuit  court  of  the  United  States 
for  the  district  of  Massachusetts,  setting  forth  the  execution 
and  terms  of  said  further  security  trust,  and  in  substance  alleg- 
ing that  under  the  circumstances  the  Union  Pacific  Railway 
Company  could  not  act  in  the  premises ;  that  the  trustee  deemed 
it  advisable  that  said  securities  be  sold,  and  praying  the  direc- 
tion of  the  court  with  respect  thereto ;  that  the  complainant  be 
directed  to  sell  said  securities,  and  that  the  proceeds  of  said 
sale,  after  deducting  the  necessary  expenses,  be  held  by  the 
trustee  in  lieu  of  said  securities  so  sold  upon  the  terms,  condi- 
tions and  trusts  created  by  and  declared  in  said  trust  ded. 
The  only  parties  made  defendants  to  this  bill  were  the  Union 
Pacific  Railway  Company  and  its  receivers.  A  decree  was  en- 
tered as  prayed,  the  securities  sold,  and  there  is  now  in  the 
hands  of  said  trust  deed,  the  sum  of  about  $548,000. 

The  United  States  was  not  made  party  to,  nor  notified  of, 

197 


the  foregoing  proceeding,  all  of  which  took  place  before  I 
learned  of  the  existence  of  said  trust.  The  trust  deed  was 
never  recorder,  and,  so  far  as  I  am  aware,  never  came  to  the 
knowledge  of  the  Attorney-General's  office  until  communica- 
tion with  respect  thereto  was  made  by  me. 

Immediately  I  learned  of  the  foregoing  facts  I  wrote  to  the 
American  Loan  and  Trust  Company,  as  trustee,  notifying  it 
that  the  United  States  made  claim  to  the  securities  and  all  the 
trust  funds  received  by  it  under  the  further  security  deed. 

Unless  otherwise  directed,  I  will  file  an  original  bill  or  inter- 
vene in  the  above-named  cause  on  behalf  of  the  United  States, 
praying  for  an  order  or  decree  that  the  funds  in  the  possession 
of  said  trustee  under  said  trust  deed  be  paid  to  the  United 
States.  From  what  I  can  learn  of  the  securities  and  from  the 
terms  of  the  trust  deed,  I  doubt  the  availability  of  questioning 
the  proceeding  whereby  said  securities  were  converted  into 
cash. 

I  am  not  without  confidence  that  said  trust  funds  can  be 
secured  for  the  United  States. 

Permit  me,  in  conclusion,  to  thank  you  for  your  specific  and 
intelligent  instructions  and  your  appreciative  regard  and 
courtesy. 

Respectfuly  submitted. 

JOHN  C.  COWIN, 

Special  Counsel  for  the  United  States. 
From  Report  of  the  Secretary  of  the  Treasury,  1899. 

On  July  7,  1898,  Congress  enacted  the  following,  which  was 
one  of  the  provisions  of  the  general  deficiency  bill : 

"  Settlement  with  the  Central  Pacific  and  Western  Pacific 
Railroads ;  That  the  Secretary  of  the  Treasury,  the  Secretary 
of  the  Interior,  and  the  Attorney-General,  and  their  succes- 
sors in  office,  be,  and  they  are  hereby,  appointed  a  commission 

198 


with  full  power  to  settle  the  indebtedness  to  the  Government 
growing  out  of  the  issue  of  bonds  in  aid  of  the  construction  of 
the  Central  Pacific  and  Western  Pacific  bond-aided  railroads, 
upon  such  terms  and  in  such  manner  as  may  be  agreed  upon 
by  them,  or  by  a  majority  of  them,  and  the  owners  of  said 
railroads:  Provided,  That  any  and  all  settlements  thus  made 
shall  be  submitted  in  writing  to  the  President  for  his  approval 
or  disapproval,  and  unless  approved  by  him  shall  not  be 
binding. 

"That  such  commission  shall  not  agree  to  accept  a  less  sum 
in  settlement  of  the  amount  due  the  United  States  than  the 
full  amount  of  the  principal  and  interest  and  all  amounts  ne- 
cessary to  reimburse  the  United  States  for  moneys  paid  for  in- 
terest and  otherwise.  And  also  provided,  That  said  commis- 
sion are  hereby  empowered  to  grant  such  time  or  times  of  pay- 
ment by  installment  and  at  such  rates  of  interest,  to  be  not  less 
than  three  per  centum  per  annum,  payable  semi-annually,  and 
with  such  security  as  to  said  commission  may  seem  expedient : 
Provided,  however,  That  in  any  settlement  that  may  be  made 
the  payment  and  full  discharge  of  said  indebtedness  shall  not 
be  postponed  to  exceed  ten  years  and  the  whole  amount,  prin- 
cipal and  interest,  shall  be  paid  in  equal  semiannual  install- 
ments within  the  period  so  limited,  and  in  any  settlement 
made  it  shall  be  provided  that  if  default  shall  be  made  in  any 
payment  of  either  principal  and  interest,  shall  immediately 
become  due  and  payable,  notwithstanding  any  other  stipulation 
of  said  settlement :  Provided  further,  That  unless  the  settle- 
ment herein  authorized  be  perfected  within  one  year  after  the 
passage  of  this  act,  the  President  of  the  United  States  shall  at 
once  proceed  to  foreclose  all  liens  now  held  by  the  United 
States  against  said  railroad  companies  and  to  collect  the  indebt- 
edness herein  sought  to  be  settled,  and  nothing  in  this  act  con- 

199 


tained  shall  be  held  to  waive  or  release  any  right,  lien,  or  cause 
of  action  already  held  by  the  United  States. 

"That  there  is  hereby  appropriated,  out  of  any  money  in  the 
Treasury  not  otherwise  appropriated,  the  sum  of  twenty  thou- 
sand dollars  to  defray  the  expenses  of  said  commission  in  mak- 
ing the  said  settlement." 

From  Report  of  the  Attorney-General,   1899. 
PACIFIC  RAILROAD  MATTERS. 

The  deficiency  appropriation  act  of  July  7,  1898,  appointed 
the  Secretary  of  the  Treasury,  the  Secretary  of  the  Interior, 
and  the  Attorney-General  a  commission  with  full  power  to  set- 
tle the  indebtedness  to  the  Government  growing  out  of  the 
issue  of  bonds  to  aid  in  the  construction  of  the  Central  Pacific 
and  Western  Pacific  bond-aided  railroads  upon  such  terms  and 
in  such  manner  as  might  be  agreed  upon  by  them  or  by  a  ma- 
jority of  them  and  the  owners  of  said  railroads,  subject  to 
the  approval  of  the  President. 

An  agreement  for  the  setlement  of  this  indebtedness  was  en- 
tered into  between  the  said  commissioners  with  the  railroad 
companies  on  February  1,  1899.  At  that  date  the  amount  due 
the  United  States  for  principal  and  interest  upon  its  subsidy 
liens  upon  the  Central  Pacific  and  Western  Pacific  railroads 
was  $58,812,715.48,  more  than  one-half  of  which  was  accrued 
interest  upon  the  principal  debt.  The  agreement  of  settlement 
provided  for  the  funding  of  this  amount  into  20  promissory 
notes  bearing  date  February  1,  1899,  payable,  respectively,  on 
or  before  the  expiration  of  each  successive  six  months  for  ten 
years,  each  note  being  for  the  sum  of  $2,940,635.78,  or  one- 
twentieth  of  the  total  amount  due.  The  notes  bear  interest  at 
the  rate  of  3  per  cent  per  annum,  payable  semi-annually,  and 

200 


have  a  condition  attached  to  the  effect  that  if  default  be  made 
either  in  the  payment  of  principal  or  interest  of  either  of  said 
notes  or  in  any  part  thereof,  then  all  of  the  said  notes  out- 
standing, principal  and  interest,  shall  immediately  become  due 
and  payable  notwithstanding  any  other  stipulation  of  the 
agreement  of  settlement. 

It  was  further  agreed  that  the  payment  of  the  principal  and 
interest  of  the  notes  shall  be  secured  by  the  deposit  with  the 
United  States  Treasury  of  $58,820,000  of  face  value  of  first 
refunding  mortgage  4  per  cent  gold  bonds,  to  be  thereafter 
issued  by  the  Central  Pacific  or  its  successor  having  charge  of 
the  railroads  then  owned  by  said  company,  such  bonds  to  be 
part  of  an  issue  of  not  exceeding  $100,000,000  in  all,  and  to  be 
secured  by  mortgage  upon  all  railroads,  equipments,  and  ter- 
minals owned  by  said  Central  Pacific  Railroad  Company,  such 
mortgage  to  be  a  first  lien  upon  such  property,  or  to  be  se- 
cured by  the  deposit  as  COLLATERAL  of  certain  percentages 
of  the  outstanding  bonds  upon  such  property  or  on  the  different 
divisional  parts  thereof. 

The  notes  provided  for  by  this  agreement  were  duly  exe- 
cuted and  delivered  to  the  Treasurer  of  the  United  States  in 
conformity  with  the  terms  of  the  agreement.  In  pursuance 
of  another  provision  of  the  agreement,  the  four  earliest  matur- 
ing notes  were  purchased  by  Speyer  &  Co.,  March  10,  1899, 
and  the  proceeds,  amounting  to  $11,762,543.12,  and  accrued 
interest  to  the  date  of  payment,  $35,771.02,  in  all  $11,798,- 
214.14,  were  received  and  covered  into  the  Treasury  March  27, 
1899,  as  part  payment  of  the  indebtedness  of  the  Central  Pa- 
cific and  Western  Pacific  Railroad  companies.  The  properties 
of  the  various  companies  comprising  the  Central  Pacific  sys- 
tem were  subsequently  conveyed  to  a  new  corporation  called 
the  Central  Pacific  Railway  Company,  which  latter  company 


201 


executed  the  mortgage  and  bonds  provided  for  by  the  agree- 
ment of  settlement.  On  October  7,  1899,  bonds  were  delivered 
to  the  Treasury  Department  by  the  Pacific  Railway  Company 
to  secure  the  outstanding  notes  held  by  the  Treasury  in  con- 
formity to  the  terms  of  the  agreement  of  settlement.  The 
United  States  therefore  holds  the  notes  of  the  Central  Pacific 
Railroad  Company  guaranteed  by  the  Southern  Pacific  Rail- 
road Company  to  the  amount  of  $47,050,172.36,  bearing  inter- 
est payable  semiannually  at  the  rate  of  3  per  cent  per  annum 
and  secured  by  the  deposit  of  an  equal  amount  of  first-mort- 
gage bonds  of  the  Pacific  Railway  Company,  thus  providing, 
beyond  doubt  or  peraclventure,  for  the  sure  and  gradual  pay- 
ment of  the  whole  of  this  subsidy  debt,  and  providing  in  the 
meantime  for  the  payment  of  interest  at  the  rate  of  3  per  cent 
upon  the  unpaid  balances. 

In  my  report  for  the  year  1898,  I  advised  the  Congress  that 
the  whole  amount  of  principal  and  interest  due  on  the  Union 
Pacific  subsidy  had  been  realized  and  paid  into  the  Federal 
Treasury,  and  that  of  the  amount  due  upon  the  Kansas  Pacific 
subsidy  the  whole  amount  of  the  principal,  namely,  $6,303,000, 
had  been  paid  in,  leaving  due  to  the  Government  only  the  ac- 
crued interest  on  the  Kansas  Pacific  amounting  to  about  $6,- 
500,000.  I  further  reported  that  I  had  caused  to  be  filed  a  claim 
on  behalf  of  the  United  States  on  account  of  this  deficiency 
against  certain  funds  remaining  in  the  hands  of  the  receivers 
of  the  Union  Pacific  Railway  Company,  which  claims,  along 
with  many  others  aggregating  a  large  sum,  were  subject  to  in- 
vestigation and  subsequent  adjudication.  This  matter  has  since 
been  brought  to  a  conclusion  with  the  very  satisfactory  result 
that  the  United  States  procured  a  decree  directing  the  receivers 
to  pay  on  account  of  its  deficiency  debt  out  of  the  moneys  in 
their  hands  as  pro  rata  dividend  upon  its  deficiency  claim  the 

202 


sum  of  $821,897.70,  which  sum  has  recently  been  paid  into 
the  Treasury  of  the  United  States  and  is  to  be  credited  against 
the  deficiency  above  mentioned. 

The  proceedings  referred  to  in  my  last  report  pending 
against  the  American  Loan  and  Trust  Company  of  Boston  as 
trustee  for  the  purpose  of  securing  on  account  of  the  Gov- 
ernment's deficiency  claim  certain  moneys  in  the  hands  of 
such  trustee  which  represent  the  proceeds  of  securities  mort- 
gage for  the  benefit  and  further  security  of  first-mortgage 
bonds  of  the  Kansas  Pacific  Railway,  and  for  the  benefit,  pro- 
tection, and  further  security  of  the  United  States  in  respect  to 
their  subsidy  bonds  and  interest  thereon,  have  not  yet  been 
orotfght  to  a  conclusion,  but  are  being  pressed  with  all  due  dili- 
gence, and  before  long  I  hope  to  be  able  to  report  the  collection 
of  a  very  substantial  sum  from  this  source  in  further  reduction 
of  the  deficiency  due  the  Government  on  this  account. 

The  amounts  paid  or  secured  to  be  paid  to  the  United  States 
on  account  of  Pacific  Railroad  subsidy  claims  since  Nov.  1, 
1897,  will  appear -from  the  following  table: 

Union  Pacific,  cash $58,448,223.75 

Kansas  Pacific,  cash   6,303,000.00 

Central  and  Western  Pacific,  cash 11,798,314.14 

Notes  47,050,172.30 

Kansas  Pacific,  dividend  on  deficiency  due  U.  S., 

cash    . 821,897.70 


Total $124,421,607.95 

From  Report  of  the  Secretary  of  the  Interior,  1899. 
On  July  7,  1898,  Congress  enacted  the  following,  which  was 
one  of  the  provisions  of  the  general  deficiency  bill : 


203 


"Settlement  with  the  Central  Pacific  and  Western  Pacific 
Railroads :  That  the  Secretary  of  the  Treasury,  the  Secretary 
of  the  Interior,  and  the  Attorney-General,  and  their  successors 
in  office,  be,  and  they  are  hereby  appointed  a  commission  with 
full  power  to  settle  the  indebtedness  to  the  Government  grow- 
ing out  of  the  issue  of  bonds  in  aid  of  the  construction  of  the 
Central  Pacific  and  Western  Pacific  bond-aided  railroads,  upon 
such  terms  and  in  such  manner  as  may  be  agreed  upon  by 
them,  or  by  a  majority  of  them,  and  the  owners  of  said  rail- 
roads :  Provided,  That  any  and  all  settlements  thus  made  shall 
be  submitted  in  writing  to  the  President  for  his  approval  or 
disapproval,  and  unless  approved  by  him  shall  not  be  binding. 

"That  said  commission  shall  not  agree  to  accept  a  less  sum 
in  settlement  of  the  amount  due  the  United  States  than  the  full 
amount  of  the  principal  and  interest  and  all  amounts  necessary 
to  reimburse  the  United  States  for  moneys  paid  for  interest 
or  otherwise:  And  also  provided,  That  said  commission  are 
hereby  empowered  to  grant  such  time  or  times  of  payment  by 
installment,  and  at  such  rates  of  interest  to  be  not  less  than 
three  per  centum  per  annum,  payable  semi-annually,  and  with 
such  security  as  to  said  commission  may  seem  expedient :  Pro- 
vided, however,  That  in  any  settlement  that  may  be  made  the 
final  payment  and  full  discharge  of  said  indebtedness  shall  not 
be  postponed  to  exceed  ten  years,  and  the  whole  amount,  prin- 
cipal and  interest,  shall  be  paid  in  equal  semiannual  install- 
ments within  the  period  so  limited,  and  in  any  settlement  made 
it  shall  be  provided  that  if  default  shall  be  made  in  the  pay- 
ment of  either  principal  or  interest  or  any  part  thereof,  then 
the  whole  sum  and  all  installments,  principal  and  interest,  shall 
immediately  become  due  and  payable,  notwithstanding  any 
other  stipulation  of  said  settlement:  Provided  further,  That 
unless  the  settlement  herein  authorized  be  perfected  within  one 


204 


year  after  the  passage  of  this  act,  the  President  of  the  United 
States  shall  at  once  proceed  to  foreclose  all  liens  now  held  by 
the  United  States  against  said  railroad  companies  and  to  col- 
lect the  indebtedness  herein  sought  to  be  settled,  and  nothing  in 
this  act  contained  shall  be  held  to  waive  or  release  any  right, 
lien  or  cause  of  action  already  held  by  the  United  States. 

"That  there  is  hereby  appropriated,  out  of  any  money  in  the 
Treasury  not  otherwise  appropriated,  the  sum  of  twenty 
thousand  dollars  to  defray  the  expenses  of  said  commission  in 
making  the  said  settlement." 

So  that  it  appears  that  out  of  an  indebtedness  of  about 
$130,000,000,  more  than  one-half  of  which  consists  of  accrued 
interest,  the  Government  has  realized  in  cash  or  its  equivalent 
the  sum  of  $124,421,670.95  within  a  period  of  less  than  two 
years. 

Taking  into  account  the  enormous  material  benefits  that  have 
accrued  to  the  country  from  the  construction  of  these  trans- 
continental lines  of  communication,  and  the  advantage  which 
the  Government  has  had  by  way  of  reduced  rates  of  transpor- 
tation and  service  over  them,  the  participation  of  the  Govern- 
ment in  the  construction  and  maintenance  of  these  enterprises 
has  been  fully  justified,  and  the  faith  of  the  original  pro- 
moters and  projectors  of  these  great  lines  has  been  proven  to 
have  had  a  substantial  basis. 


From  the  Washington  Times,  July  28th,  11)08. 
CENTRAL  PACIFIC  SETTLES  ACCOUNT. 

The  Central  Pacific -Railroad  closed  its  business  relations 
with  the  Government  today  when  its  check  for  $2,940,000,  the 

/ 

205 


last  payment  under  the  funding  act  of  1889,  was  accepted  by 
the  Treasury  Department. 

The  check  was  for  the  payment  due  February  1,  1909,  but 
the  returning  wave  of  prosperity  enabled  the  Central  Pacific 
Railroad  Company  to  avail  itself  of  the  advantage  of  paying 
in  advance,  and  hence  the  arrival  of  the  $2,000,000  check.  This 
closes  the  account  between  the  railroad  and  Uncle  Sam. 


From  Report  of  Attorney-General,  1898. 
PACIFIC  RAILROAD  MATTERS. 

In  the  annual  report  of  this  Department  for  the  year  1897  a 
full  account  was  given  of  all  the  proceedings  in  the  cases 
then  pending  for  the  foreclosure  of  the  Government  subsidy 
liens  and  the  other  mortgages  upon  the  Union  Pacific  Railroad 
and  it  was  there  stated  that  on  November  1,  1897,  this  prop- 
erty, comprising  what  is  known  as  the  main  line  of  the  Union 
Pacific  Railroad,  extending  from  Council  Bluffs,  to  the  west- 
ern terminal  point,  5  miles  beyond  Ogden,  with  its  branches, 
franchises,  and  equipments,  was  struck  off  and  sold  to  pur- 
chasing trustees,  on  behalf  of  the  mortgages,  creditors  and 
stockholders  associated  together  for  the  reorganization  of  the 
company,  for  the  sum  of  $58,448,223.75,  being  the  total  amount 
due  to  the  Government,  as  stated  by  the  Secretary  of  the. 
Treasury,  including  the  sum  of  $4,549,368.20,  cash  in  the 
sinking  fund.  "By  the  terms  of  the  decree  in  the  foreclosure 
sale  this  cash  in  the  sinking  fund  was  directed  to  be  applied 
to  the  credit  of  the  United  States  upon  the  confirmation  of  the 
purchase. 

The  purchasers  of  the  property,  in  compliance  with  their 


206 


bid,  have  '  since  paid  into  the  Treasury  an  amount  which, 
added  to  the  sinking  fund  thus  applied,  aggregates  $58,448,- 
.223.75  being  the  full  amount  of  the  principal  and  interest  due 
the  Government  upon  its  subsidy,  thus  relieving  the  United 
States  from  any  loss  whatever  upon  their  claim,  and  bringing 
to  a  final  and  most  satisfactory  termination  this  long-standing 
and  troublesome  subject. 

The  sale  of  the  Kansas  Pacific  line,  upon  which  the  Govern- 
ment held  a  second-mortgage  lien,  having  been,  as  stated  in 
the  report  of  1897,  postponed  at  the  instance  of  the  Govern- 
ment to  December  15,  1897,  was  further,  upon  the  application 
of  the  United  States,  postponed  to  the  16th  day  of  Febru- 
ary. 1898. 

By  the  decree  of  the  court  in  that  case,  an  upset  price  on  the 
sale  of  the  property  was  fixed  at  a  sum  which  would  yield  to 
the  Government  only  $2,500,000  upon  its  claim.  The  reorgan- 
ization committee,  in  conference  with  this  Department,  de- 
clared its  purpose  of  making  no  larger  bid  than  that  fixed  by 
the  dercee  of  the  court,  so  that  the  Government  was  confronted 
with  a  danger  of  receiving  for  its  total  lien  upon  this  line, 
amounting  to  nearly  $13,000,000,  principal  and  interest,  only 
the  above-mentioned  sum  of  $2,500,000.  Believing  that  the 
interests  of  the  Government  required  that  an  effort  should  be 
made  to  obtain  a  larger  sum,  the  President  of  the  United  States 
was  advised  by  me  that  under  the  act  entitled  "An  act  author- 
izing an  investigation  of  the  books,  accounts,  and  methods  of 
railroads  which  have  received  aid  from  the  United  States,  and 
for  other  purposes,"  passed  March  3,  1887,  the  Government 
had  the  right  to  redeem  the  incumbrances  upon  the  property 
which  were  prior  to  the  lien  of  the  Government  subsidy  by 
paying  the  sums  lawfully  due  in  respect  thereof  out  of  the 
Treasury  of  the  United  States,  so  that  the  United  States  should 
thereupon  become  subrogated  to  all  rights  and  securities  there- 

207 


tobefore  pertaining  to  the  liens  and  mortgages  in  respect  of 
which  such  payments  "should  be  made.  Accordingly,  on  the  8th 
clay  of  February,  1898,  in  pursuance  of  the  act  of  1887,  the 
President,  by  Executive  order,  authorized  the  Secretary  of 
the  Treasury  to  pay  out  of  the  Treasury  to  the  person  or  per- 
sons lawfully  entitled  to  receive  the  same  the  amounts  lawfully 
due  upon  the  prior  mortgages  upon  the  eastern  and  middle 
division  of  said  railroad  out  of  any  money  in  the  Treasury  not 
otherwise  appropriated.  Thereupon,  under  my  direction,  a  pe- 
tition was  prepared  to  be  presented  to  the  court,  offering  to  re- 
deem said  prior  liens  in  such  manner  as  the  court  might  direct, 
and  praying  that  thereupon  the  United  States  might  be  held 
to  be  subrogated  to  all  the  rights  of  said  prior  lien  holders,  and 
that  a  receiver  might  be  appointed  to  take  possession  of  the 
mortgaged  premises,  and  maintain  and  operate  the  same  until 
Congress  or  the  court  otherwise  provided,  and  that  the  sale 
fixed  for  February  16,  1898,  might  be  postponed. 

Moved  by  this  action  of  the  Government  for  the  redemption 
of  the  prior  liens  and  the  postponement  of  the  sale,  the  reor- 
ganization committee  agreed,  provided  said  petition  should  be 
withdrawn  and  the  sale  allowed  to  proceed,  that  they  would 
bid  at  the  sale  for  said  road  a  sum  which  would  realize  to  the 
Government  the  whole  amount  of  the  principal  of  its  debt, 
namely  $6,303,000.  Believing  from  all  the  information  this 
Department  was  able  to  obtain  that  no  better  price  than  this 
could  be  obtained  at  a  later  date  if  the  sale  should  be  post- 
poned, and  appreciating  the  embarrassment  and  difficulty  un- 
der which  the  Government  would  labor  if  it  should  become  the 
purchaser  of  the  property  at  the  sale  in  the  absence  of  any 
legislation  by  Congress  which  would  enable  any  of  the  Execu- 
tive Departments  to  take  charge  of  and  operate  the  road,  it 
was  deemed  best  to  permit  the  sale  to  proceed,  upon  the  guar- 


208 


antee  of  a  minimum  bid  which  would  realize  to  the  Govern- 
ment the  whole  principal  of  its  debt,  and  the  sale  thereupon 
took  place,  the  property  being  struck  off  the  representatives 
of  the  reorganization  committee  at  a  figure  which  yielded  to 
the  Government  the  sum  above  mentioned.  It  will  thus  be 
perceived  that  the  Government  secured  an  advance  of 
$3,803,000  on  account  of  its  lien,  over  and  above  the  sum 
which  the  court  had  fixed  as  the  upset  price,  and  which  the 
reorganization  committee  had  declared  was  the  maximum 
which  they  were  willing  to  pay  for  the  property. 

The  total  result  of  these  proceedings  against  the  Union  Pa- 
cific system,  embracing  the  main  line  and  the  Kansas  Pacific 
line,  is  that  the  Government  has  received  on  account  of  its 
subsidy  claim  the  sum  of  $64,751,223.75,  which  is  an  increase 
of  $18,997,163.76  over  the  sum  which  the  reorganization  com- 
mittee first  agreed  to  bid  for  the  joint  property,  leaving  due 
to  the  Government  only  the  interest  on  the  Kansas  Pacific 
subsidy,  amounting  to  about  $6,500,000. 

Under  my  direction,  on  April  2,  1908,  application  was  made 
to  the  circuit  court  of  the  United  States  for  the  eighth  circuit 
for  a  deficiency  decree  for  the  amount  of  said  unpaid  interest. 
The  Union  Pacific  Railway  Company  answered  this  petition, 
denying  the  right  of  the  United  States  to  a  deficiency  decree, 
contending  in  substance,  that  it  did  not  assume  to  pay  or  be- 
come liable  for  the  debts  of  the  Kansas  Pacific  Railway  by  its 
articles  of  union  and  consolidation  with  that  company  or  other- 
wise, and  that,  on  the  contrary,  by  the  articles  of  union  and 
consolidation  it  is  expressly  provided  that  the  Union  Pacific 
Company  should  not  assume  the  debts  and  liabilities  of  the 
constituent  companies.  This  application  was  subsequently  re- 
ferred for  hearing  to  William  D.  Cornish,  special  master,  and 
the  matter  still  rests  in  that  condition,  proceedings  thereon 


209 


having  been  suspended  on  account  of  reasons  which  are  now 
stated. 

On  the  14th  day  of  February,  1898,  upon  the  application  of 
the  receivers  in  the  original  Ames  foreclosure  case,  the  court 
made  an  order  providing,  among  other  things,  that  all  persons 
claiming  any  interest  in  or  lien  upon  any  of  the  funds  or  prop- 
erty in  the  hands  of  the  receivers,  either  as  creditors  of  the 
receivers  or  as  creditors  of  the  Union  Pacific  Railway  Com- 
pany, should  file  their  claims  with  William  D.  Cornish,  special 
master,  on  or  before  the  1st  day  of  July,  1898,  and  that  any 
party  to  the  suits,  or  who  filed  a  claim  in  accordance  with  the 
order,  might  file  an  answer  to  the  claim  of  any  other  party 
within  a  limited  time.  By  my  direction  there  was  filed  with 
said  master  a  claim  of  the  United  States  against  the  funds  in 
the  receivers'  hands,  setting  forth  the  facts  upon  which  the 
same  was  based  and  claiming  the  same  amount  as  before  stated 
in  the  petition  for  a  deficiency  decree.  Many  other  claims, 
aggregating  a  great  amount,  have  been  filed  with  the  master 
under  the  foregoing  order,  and  nearly  every  claimant  has  filed 
an  answer  contesting  the  right  of  every  other  claimant.  These 
matters  are  still  pending,  and  testimony  therein  is  now  being 
taken.  The  proceedings  in  the  latter  matter  practically  super- 
seded those  filed  to  obtain  a  decree  for  deficiency,  and  ren- 
dered the  further  prosecution  of  the  latter  application  un- 
necessary. 

There  is  a  sum  amounting  to  about  $548,000  in  the  hands 
of  the  American  Loan  and  Trust  Company  of  Boston,  as 
trustee  which  represents  the  proceeds  of  certain  securities 
mortgaged  to  said  trustee  for  the  benefit  and  further  security 
of  the  first-mortgage  bonds  of  the  Kansas  Pacific  Railway, 
having  priority  over  the  lien  of  the  United  States,  and  for  the 
benefit,  protection,  and  further  security  of  the  United  States,  in 
respect  of  such  subsidy  bonds  and  interest  thereon.  Due  pro- 

210 


ceedings  have  been  taken  to  present  the  rights  of  the  Govern- 
ment as  to  this  fund,  and  to  obtain  the  same,  or  so  much  thereof 
as  the  Government  may  be  entitled  to  according  to  the  equities 
of  the  case. 

It  is  hoped  and  expected  that  from  the  two  sources  men- 
tioned a  substantial  sum  will  be  collected  by  the  Government 
to  be  applied  toward  the  satisfaction  of  the  balance  remaining 
due  on  the  Kansas  Pacific  claim. 

The  indebtedness  of  the  Central  Pacific  Railroad  Company 
to  the  Government  having  become  due  on  the  1st  of  January, 
1898,  and  default  in  the  payment  thereof  having  been  made 
by  the  company,  I  took  steps  to  prepare  the  necessary  papers 
to  foreclose  the  Government's  lien.  Before  the  preparation 
of  the  foreclosure  papers  was  completed,  Congress  by  act  ap- 
proved July  7,  1898,  enacted  the  following: 

That  the  Secretary  of  the  Treasury,  the  Secretary  of  the  In- 
terior, and  the  Attorney-General,  and  their  successors  in  office, 
be,  and  they  are  hereby,  appointed  a  commission  with  full 
power  to  settle  the  indebtedness  to  the  Government  growing 
out  of  the  issue  of  bonds  in  aid  of  the  construction  of  the  Cen- 
tral Pacific  and  Western  Pacific  bond-aided  railroads,  upon 
such  terms  and  in  such  manner  as  may  be  agreed  upon  by 
them,  or  by  a  majority  of  them,  and  the  owners  of  said  rail- 
roads:  Provided,  that  any  and  all  settlements  thus  made  shall 
be  submitted  in  writing  to  the  President  for  his  approval  or 
disapproval,  and  unless  approved  by  him  shall  not  be  binding. 

That  said  commission  shall  not  agree  to  accept  a  less  sum 
in  settlement  of  the  amount  due  the  United  States  than  the 
full  amount  of  the  principal  and  interest  and  all  amounts 
necessary  to  reimburse  the  United  States  for  moneys  paid  for 
interest  or  otherwise:  And  also  provided,  That  said  commis- 
sion are  hereby  empowered  to  grant  such  time  or  times  of 
payment  by  installment,  and  at  such  rates  of  interest,  to  be  not 

211 


less  than  three  per  centum  per  annum,  payable  semiannually, 
and  with  such  security  as  to  said  commission  .may  seem  ex- 
pedient: Provided,  however,  That  in  any  settlement  that  may 
be  made  the  final  payment  and  full  discharge  of  said  indebted- 
ness shall  not  be  postponed  to  exceed  ten  years,  and  the  whole 
amount,  principal  and  interest,  shall  be  paid  in  equal  semi- 
annual installments  within  the  period  so  limited,  and  in  any 
settlement  made  it  shall  be  provided  that  if  default  shall  be 
made  in  any  payment  of  either  principal  or  interest,  or  any 
part  thereof,  then  the  whole  sum  and  all  installments,  principal 
and  interest,  shall  immediately  become  due  and  payable,  not- 
withstanding any  other  stipulation  of  said  settlement:  Pro- 
vided further,  That  unless  the  settlement  herein  authorized  be 
perfected  within  one  year  after  the  passage  of  this  act  the 
President  of  the  United  States  shall  at  once  proceed  to  fore- 
close all  liens  now  held  by  the  United  States  against  said  rail- 
road companies  and  to  collect  the  indebtedness  herein  sought 
to  be  settled,  and  nothing  in  this  act  contained  shall  be  held  to 
waive  or  release  any  right,  lien  or  cause  of  action  already  held 
by  the  United  States. 


COMPANIES'  FIRST-MORTGAGE  BONDS. 

The  act  of  1864  authorized  the  issuance  by  the  companies 
of  first  mortgage  bonds  of  even  tenor,  date,  and  amount,  as 
the  subsidy  bonds,  to  constitute  a  prior  lien  to  that  of  the  Gov- 
ernment. Under  this  act  bonds  were  issued  by  the  companies 
in  the  following  amounts:  Union  Pacific  (including  Kansas), 
$33,532,000;  Central  Pacific  (including  Western),  $27,- 
853,000;  Sioux  City  and  Pacific,  $1,628,000;  Central  Branch 
Union  Pacific,  $1,600,000.  Of  the  Central  Pacific  bonds, 


212 


$2,995,000,  which  matured  on  July  1,  1895,  were  extended 
with  the  consent  of  the  holders,  for  two  and  one-half  years, 
with  interest  reduced  to  5  per  cent,  and  an  installment  of 
Western  Pacific  bonds,  maturing  in  December,  1895,  was 
taken  up  by  a  new  issue.  The  Union  Pacific  having  defaulted 
in  the  payment  of  both  principal  and  interest,  foreclosure  pro- 
ceedings have  been  instituted  and  are  pending. 


BONDS  HELD  IN  THE  SINKING  FUND. 

The  amounts  required  to  be  applied  by  the  companies  to  the 
sinking  fund  established  by  the  Thi^rman  Act  have  been 
largely  invested  in  the  bonds  of  the  companies,  which  are  prior 
lien  to  that  of  the  United  States,  under  authority  granted  by 
act  of  Congress  approved  March  3,  1887.  The  following  state- 
ment shows  the  kind  and  amount  of  bonds  held  in  the  sinking 
fund  to  the  credit  of  the  Union  and  Central  Pacific  companies, 
respectively,  on  June  30,  1896 : 

Union  Central 

Pacific  fund.  Pacific  fund.  Total. 

United   States  bonds,  5  per  cent $915,750  $125,000  19,624,250 

United  States  bonds,  6  per  cent 64,000  2,130,000  2,194,000 

Union   Pacific   R.   R.  bonds 6,367,000  939,000  7,306,000 

Central  Pacific  R.   R.  bonds 3,230,000  1,672,000  4,902,000 

Central    Branch    Union    Pacific    R.    R. 

bonds     1,025,000  163,000  1,118,000 

Sioux  City  &   Pacific  R.  R.  bonds 716,500  32,000  748,500 

Western    Pacific    R.    R.    bonds 350,000  117,000  467,000 

Eastern   Division    Union    Pacific   R.    R. 

D0n(js     1,478,000  300,000  1,778,000 

Total $14,146,250  $5,478,000  $19,624,250 

These  are  past  due  and  still  unpaid  $3,432,000  in  the  Union 
Pacific  fund,  and  $643,000  in  the  Central  Pacific  fund,  total 
$4,075,000,  being  bonds  of  the  Union  Pacific  Eastern  Division 


213 


(now  Kansas),  Union  Pacific,  and  Central  Branch  Union 
Pacific. 

The  Union  Pacific  Railroad  Company  (now  the  Union  Di- 
vision of  the  Pacific  Railway  Company)  was  chartered  under 
the  Act  of  July  1,  1862,  and  Government  bonds,  bearing  6  per 
cent  interest,  to  be  secured  by  a  first  mortgage  on  the  road, 
were  issued  as  follows : 

Under  the  authority  given  by  the  Act  of  1864,  the  company 
issued  its  first  mortgage  bonds  as  follows: 

Date  of  issue.  Amount.         Date  of  Maturity. 

Eastern    division,    Aug.    1,    1865 $2,240,000  Aug.  1,  1895 

Middle    division,    June    1,    1866 4,063,000  June  1,  1896 


Total $6,303,000 

The  Denver  Pacific  Railway  and  Telegraph  Company  was 
authorized  by  act  of  Congress  approved  March  3,  1869,  to  con- 
struct that  part  of  the  Kansas  Pacific  line  from  Denver  to 
Cheyenne  and  to  receive  a  transfer  from  that  company  of  a 
proportionate  share  of  its  land  grant.  This  company,  however, 
received  no  subsidy  in  bonds. 

The  portions  of  road  of  the  Union  Pacific  'Railway  Company 
which  were  constructed  by  the  aid  of  a  subsidy  in  bonds  are 
as  follows :  Bridge  junction,  Omaha,  Nebr.,  to  the  junction 
with  the  Central  Pacific,  5  miles  west  of  Ogden;  Kansas  City, 
Mo.,  to  a  point  near  Boaz,  Kans.  The  Supreme  Court  has  de- 
cided (99  U.  S.,  455)  that  the  subsidy  bonds  are  a  lien  which 
is  confined  to  the  bond-aided  portion  of  the  road,  and  a  per- 
centage of  net  earnings  is  demandable  by  the  United  States 
from  that  portion  only. 

The  act  of  July  2,  1864,  requires  the  company  to  pay  an- 
nually to  the  United  States  5  per  cent  of  its  net  earnings,  and 
one-half  of  the  charges  for  transportation  on  account  of  the 
Government  is  retained  and  applied  to  the  payment  of  the 


214 


bonds  issued  by  the  United  States  and  interest  thereon.  This 
was  amended  by  the  act  approved  May  7,  1878,  known  as  the 
Thurman  Act,  which  requires  the  retention  of  the  whole 
amount  of  compensation  for  services  rendered  the  Govern- 
ment by  the  company,  one-half  applied  to  the  liquidation  of  in- 
terest on  the  subsidy  bonds  and  the  other  half  to  be  carried  to 
a  sinking  fund  to  meet  the  debt  at  maturity;  it  also  requires 
the  annual  payment  by  the  company  of  an  amount  sufficient  to 
make  the  5  per  cent  of  net  earnings  and  the  whole  amount  of 
compensation  for  transportation  equal  to  25  per  cent  of  the 
net  earnings  of  the  road  for  that  year.  The  Thurman  Act 
applies  to  the  Union  Division  only. 

The  excess  of  interest  paid  by  the  United  States  on  account 
of  the  subsidy  bonds  over  all  credits,  including  both  divisions, 
amounted  on  June  30,  1896,  to  $52,000,198.93. 

TO  THE  HONORABLE  THE  JUDGES  OF  THE  CIR- 
CUIT COURT  OF  THE  UNITED  STATES  WI  THIN 
AND    FOR    THE    EIGHTH    JUDICIAL    CIRCUIT 
AND  DISTRICT  OF  NEBRASKA. 

That  the  sixth  section  of  the  said  act  required  said  com- 
panies to  transmit  telegraphic  dispatches  and  transport  mails, 
troops,  and  munitions  of  war,  supplies  and  public  stores  upon 
said  railroads  for  the  Government,  whenever  required  to  do  so, 
and  that  the  Government  should  at  all  times  have  the  prefer- 
ence in  the  use  of  the  same  for  all  said  purposes  at  fair  and 
reasonable  rates  of  compensation,  not  exceeding  the  amount 
paid  by  private  parties  for  the  same  kind  of  services  and  that 
all  compensation  for  services  rendered  for  the  Government 
should  be  applied  to  the  payment  of  said  bonds  and  interest 
until  the  whole  amount  should  be  fully  paid,  and  that  after 
said  railroads  should  respectively  be  completed,  until  the  full 

215 


payment  of  said  bonds  and  interest,  that  at  least  5  per  centum 
of  the  net  earnings  of  said  road  should  be  annually  applied  to 
the  payment  thereof.  That  the  total  amount  of  credits  for 
payments  of  interest  made  by  the  Union  Pacific  Railroad  Com- 
pany, the  Kansas  Pacific  Railroad  Company,  and  the  Union 
Pacific  Railroad  Company,  under  said  sixth  section,  was,  on 
June  30,  1893,  $17,971,156.65. 

That  by  the  eighteenth  section  of  said  act  it  was  enacted 
that  "the  better  to  accomplish  the  object  of  this  act,  namely, 
to  promote  the  public  interest  and  welfare  by  the  construction 
of  said  railroad  and  telegraph  line,  and  keeping  the  same  in 
working  order,  and  to  secure  to  the  Government  at  all  times 
(but  particularly  in  time  of  war)  the  use  and  benefits  of  the 
same  for  postal,  military,  and  other  purposes,  Congress  may 
at  any  time,  having  due  regard  for  the  rights  of  said  com- 
panies named  herein,  add  to,  alter,  amend,  or  repeal  this  act." 

That  afterwards,  by  the  act  of  Congress  approved  July  2, 
1864,  amendatory  of  the  said  act  approved  July  1,  1862,  it  was 
provided  that  the  said  railroad  companies  might  respectively 
issue  their  first  mortgage  bonds  on  their  respective  railroad 
and  telegraph  lines  to  amounts  not  exceeding  the  amount  of 
the  said  bonds  of  the  United  States,  and  of  even  tenor  and 
date,  time  and  maturity,  rate  and  character  of  interest,  with 
the  said  bonds  authorized  to  be  issued  to  said  railroad  com- 
panies respectively,  and  that  the  lien  of  the  said  United  States 
bonds  should  be  subordinate  to  that  of  the  bonds  of  any  or 
either  of  said  companies  authorized  to  be  issued  on  their  re- 
spective road,  property  and  equipments,  "except  as  to  the  pro- 
visions of  the  sixth  section"  of  the  act  of  July  1,  1862,  "relat- 
ing to  the  transmission  of  dispatches  and  the  transportation  of 
mails,  troops,  munitions  of  war,  supplies,  and  public  stores  for 
the  Government  of  the  United  States." 


216 


And  that  by  the  twenty-second  section  of  said  act  it  was  pro- 
vided that  ''Congress  may  at  any  time  alter,  amend,  or  repeal 
this  act." 

That  under  the  authority  of  said  acts,  and  the  acts  amenda- 
tory thereto,  the  Union  Pacific  Railroad  Company,  before  its 
consolidation  hereinafter  described,  had  constructed  a  rail- 
road and  telegraph  line  with  the  necessary  fixtures  and  appur- 
tenances, including  bridges  and  approaches,  and  owned  the 
necessary  equipment  for  the  operation  thereof,  said  line  ex- 
tending from  Council  Bluffs,  in  the  State  of  Iowa,  to  a  point 
west  of  Ogden,  in  the  Territory  of  Utah,  a  distance  of  1,042.93 
miles,  and  the  Kansas  Pacific  Railway  Company  has  built  a 
railroad  and  telegraph  line  with  the  necessary  fixtures  and 
appurtenances,  including  bridges  and  approaches,  and  including 
a  branch  to  Leavenworth,  and  had  purchased  and  owned  the 
necessary  equipment  for  the  operation  thereof,  said  line  ex- 
tending from  Kansas  City,  in  the  State  of  Missouri  to  Den- 
ver, in  the  State  of  Colorado,  a  distance  of  642.94  miles,  and 
said  Leavenworth  branch  having  a  total  mileage  of  31.93  miles, 
and  that  the  Denver  Pacific  Railway  and  Telegraph  Com- 
pany had  built  a  line  of  railway  from  Denver,  in  the  State  of 
Colorado  to  Cheyenne,  now  in  the  State  of  Wyoming,  with  the 
necessary  fixtures  and  appurtenances,  including  bridges  and 
approaches,  a  distance  of  104.6  miles,  and  had  purchased  and 
owned  the  necessary  equipment  for  the  operation  thereof. 

And  the  said  Attorney-General  for  the  United  States  of 
America  gives  the  court  here  to  understand  and  be  informed 
that  the  nature  and  extent  of  the  claims  and  liens  asserted  or 
which  may  be  asserted  against  and  upon  the  property  of  the 
Union  Pacific  Railroad  Company,  the  Kansas  Pacific  Railway 
Company,  and  the  Denver  Pacific  Railway  and  Telegraph 
Company,  and  since  their  consolidation  aforesaid,  against  and 


217 


upon  the  property  of  the  said  Union  Pacific  Railway  Com- 
pany 

EXHIBIT  A. 
(Title  Court  and  Cause.) 

Third    and    final    report    of    William    D.    Cornish,    Special 
Master,  under  the  Decree  of  Foreclosure  entered  herein. 
To  the  Honorable  the  Circuit  Court  of  the  United  States  for 
the  District  and  in  the  cause  above  entitled : 

I  hereby  respectfully  report  that  having  received  payment 
of  the  bid  of  the  purchasers  at  the  sale  made  by  me  on  No- 
vember 2nd,  1897,  under  the  decree  of  foreclosure  herein,  and 
having  made  and  delivered  my  deed  of  the  property  sold  to 
Union  Pacific  Railroad  Company,  the  assignee  of  said  pur- 
chasers, all  as  heretofore  reported  by  me  herein,  I  have  paid 
out  and  disposed  of  the  proceeds  of  said  sale  and  have  per- 
formed the  further  duties  imposed  upon  me  in  respect  of  said 
sale  by  said  decree  of  foreclosure  as  follows: 

FIFTH.     . 

There  are  now  outstanding  and  unpaid  of  the 
said  mortgage  bonds,  and  coupons  13  bonds  which 
matured  July  1,  1897,  and  prior  thereto,  being 
Bonds  Nos.  1036,  1693,  4187,  5077,  7354,  7399, 
7665,  7768,  7814,  8185,  8467,  8470,  8471,  upon 
each  of  which  bonds  there  is  applicable  to  be  paid 
out  of  said  purchase  money  the  sum  of  $1,034 
aggregating  $  13,442.00 

Eleven  bonds  which  matured  according  to  their 
tenor  on  Jan.  1,  1898,  being  bonds  Nos.  12102, 
12532,  13435,  15526,  13909,  15906,  15907,  15908, 


218 


15909,  15910,  15924,  upon  each  of  which  bonds 
with  the  coupon  maturing  January  1,  1898,  at- 
tached there  is  applicable  to  be  paid  out  of  said 
purchase  price  the  sum-  of  '$1,034  aggregating 11,374.00 

Twenty-one  bonds  maturing  according  to  their 
tenor  July  1,  1898,  being  bonds  Nos.  16377,  17103, 
18644,  19461,  20271,  22316,  22317,  22318,  22319, 
22320,  22901,  22902,  22903,  22904,  22905,  22906, 
22907,  22908,  22909,  22910,  24104,  upon  each  of 
which  bonds  with  the  coupons  maturing  January  1, 
1898,  and  July  1,  1898,  attached  here  is  applicable 
to  be  paid  out  of  said  purchase  price  the  sum  of 
$1,034  aggregating  21,714.00 

Three  bonds  maturing  according  to  their  tenor 
Jan.  1,  1899,  being  Nos.  28411,  28574,  28688,  upon 
each  of  which  bonds  with  the  coupons  maturing 
Jan.  1,  1898,  July  1,  1898,  Jan.  1,  1899,  attached 
here  is  applicable  to  be  paid  out  of  said  purchase 
price  the  sum  of  $1,034  aggregating 3,102.00 

The  several  coupons  above  referred  to  maturing 
on  Jan.  1,  1898,  are  entitled  to  be  paid,  if  separately 
presented  at  the  rate  of  $30.10  each,  the  bonds 
from  which  such  coupons  were  detached  being,  in 
such  case,  entitled  to  -receive  only  the  sum  of 
$1,003.90. 

The  coupons  maturing  July  1,  1898,  or  Jan.  1, 
1898,  issued  with  any  said  bonds  are  not  entitled 
to  be  paid  separately  in  any  sum  whatever,  but  are 
to  be  surrendered  upon  payment  of  the  bond  to 
which  they  belong  as  a  part  thereof. 

There  are  also  outstanding  two  coupons  matur- 


219 


ing  Jan.   1,   1898,   one  detached   from  bond   No. 
23126,  each  of  which  coupons  is  entitled  to  be  paid 

out  of  said  purchase  at  $30.10 60.00 

The  amount  so  applicable  to  be  paid  upon  all 
of  said  bonds  and  coupons  outstanding  as  above 
stated  in  the  amount  of $  49,692.20 

SIXTH. 

In  accordance  with  the  requirements  of  the  decree  herein 
I  have  deposited  with  the  Clerk  of  the  United  States  Circuit 
Court  for  the  District  of  Nebraska,  to  be  applied  in  payment 
of  said  outstanding  bonds  and  coupons  in  the  several  amounts 
as  herein  stated  to  be  applicable  thereto,  the  total  sum  of  $49,- 
692.20  together  with  the  sum  of  $496.93,  being  one  per  cent 
upon  said  amount  for  Clerk's  costs,  in  all  the  sum  of  $50,189.13, 
and  have  reported  to  said  Clerk  of  the  Court  the  amount  ap- 
plicable to  the  payment  of  each  of  such  bonds  and  coupons  and 
the  numbers  and  amounts  thereof,  a  copy  of  which  report  is 
hereto  attached  and  marked  Exhibit  H,  and  have  received 
from  said  Clerk  of  the  Court  his  receipt  for  said  deposit  the 
original  or  a  copy  of  which  receipt  is  hereto  attached  and 
marked  Exhibits  F. 

SEVENTH. 

There  remained  in  my  hands  undisposed  of  after  making 
said  deposit  with  the  clerk  of  the  court  as  aforesaid  of  the 
moneys  derived  by  me  from  the  purchasers  at  said  sale  the 
sum  of  $15,598.11,  which  sum  I  have  returned  and  paid  over 
to  Union  Pacific  Railroad  Company,  as  the  assignee  of  the 
purchasers  at  said  sale,  and  have  taken  its  receipt  therefor,  a 
duplicate  original  of  which  receipt  is  hereto  attached  and 
marked  Exhibit  G. 


220 


EIGHTH. 

Summary  of  Receipts  and  Disbursements. 
Amount  received  from  the  pur- 
chasers      $5,373,249.04 

Amount     paid     on     bonds     and 

coupons    $5,307,461.80 

Amount  deposited  in  court 50,189.13 

Amount  returned  to  purchasers        15,598.11 

$5,373,249.04 

NINTH. 

No  moneys,  bonds  or  coupons  received  by  me  as  Special 
Master  herein  in  my  possession  and  so  far  as  I  am  advised  my 
duties  as  such  Special  Master  have  been  fully  performed. 
Respectively  submitted, 

W.  D.  CORNISH, 

Special  Master. 
Dated  August  14,  1899. 

EXHIBIT  "E"  W.  D.  C. 

(Title  Court  and  Cause.) 

UNION    PACIFIC    FIRST    MORTGAGE. 

To  the  Clerk  of  the  United  States  Circuit  Court  for  the 
District  of  Nebraska. 

Complying  with  the  directions  and  requirements  of  the  final 
decree  of  foreclosure  entered  in  the  above  cause  on  the  29th 
day  of  July,  1897,  I  hereby  report  that  I  have  ascertained  and 
received  the  full  amount  derived  and  derivable  from  all  sources 
on  account  of  the  sale  of  the  property  provided  to  be  made  by 
me  under  said  decree,  and  that  after  receiving  from  the  pur- 
chasers at  said  sale  in  part  payment  of  the  purchase  price  of 

221 


said  property  certain  of  the  bonds  and  coupons  receivable  for 
such  purposes  .under  the  provisions  of  said   decree,   I   fixed 
the  20th  day  of  January,  1898,  as  the  time  on  which  bonds 
or  coupons   entitled   to  payment  out   of   said   purchase   price 
should  be  presented  to  me  for  such  payment.     Said  date  hav- 
ing passed  and  such  bonds  and  coupons  as  have  been  presented 
to  me  for  payment  out  of  the  proceeds  of  sale  having  been 
paid  by  me  out  of  such  proceeds  of  said  sale,  I  have  ascertained 
and  now  report  to  you  that  the  unpresented  bonds  and  coupons 
now  outstanding  are  as  follows : 
Thirteen    bonds    secured    by   the   mortgage    fore- 
closed upon  herein,  being  Nos.  1036,  1693,  4187, 
5077,  7354,  7399,  7665,  7768,  7814,  8185,  8467, 
8470,  8471,  maturing  according  to  their  tenor, 
on  July  1,  1897,  or  prior  thereto,  upon  each  of 
which    bonds    with    coupons    attached    there    is 
applicable  to  be  paid  out  of  the  moneys  derived 
from  the  sale  of  the  property  under  said  decree 

the  sum  of  $1,034   : $  13,442.00 

Eleven  bonds  secured  by  the  mortgage  foreclosed 
upon  herein,  being  Nos.  12102,  12532,  13435, 
13909,  15526,  15909,  15907,  15908,  15910,  15924, 
maturing  according  to  their  tenor,  on  Jan.  1, 
1898,  and  upon  each  of  which  bonds  with  the 
coupons  maturing  Jan.  1,  1898,  attached  there  is 
applicable  to  be  paid  out  of  the  moneys  derived 
from  the  sale  of  the  property  under  said  decree 

the  sum  of  $1,034 11,374.00 

Twenty-one  bonds  secured  by  the  mortgage  fore- 
closed upon  herein,  being  Nos.  16377,  17103, 
18644,  18461,  20271,  22316,  22317,  22318,  22319, 
22320, 22901,  22902,  22903,  22904,  22905,  22906, 


222 


•2-3907,  22908,  22909,  22910,  24104,  maturing  ac- 
cording to  their  tenor,  on  July  1,  1898,  upon  each 
of  which  bonds  with  the  coupons  maturing  Jan- 
uary 1,  1898,  and  July  1,  1898,  attached  there  is 
applicable  to  be  paid  out  of  the  moneys  derived 
from  the  sale  of  the  property  under  said  decree 
the  sum  of  $1,034 21,714.00 

Three  bonds  secured  by  the  mortgage  foreclosed 
upon  herein,  being  Nos.  28411,  28574,  28688, 
maturing  according  to  their  tenor  on  Jan.  1, 
1899,  upon  each  of  which  bonds  with  the 
coupons  maturing  Jan.  1,  1898,  July  1,  1898,  and 
Jan.  1,  1899,  attached  there  is  applicable  to  be 
paid  out  of  the  moneys  derived  from  the  sale  of 
the  property  under  said  decree  the  sum  of 
$1,034  3,102.00 

Two  coupons  maturing  Jan.  1,  1898,  one  detached 
from  bond  Xo.  17533  and  one  detached  from 
bond  No.  23126,  each  in  the  sum  of  $30.10.  .  60.20 


$  49,692.20 

Should  any  of  the  coupons  maturing  by  their  terms  Jan.  1, 
1898,  belonging  to  the  outstanding  bonds  above  referred  to  be 
presented  separately  such  coupons  are  to  be  paid  at  the  amount 
of  $30.10  in  bonds  from  which  such  coupons  were  detached 
being,  in  such  cases  entitled  to  receive  only  the  sum  of 
$1,003.90. 

Should  any  of  the  coupons  maturing  by  their  terms  July  1, 
1898,  or  Jan.  1,  1899,  belonging  to  the  bonds  above  referred  to 
be  presented  separately  no  payment  should  be  made  thereon, 
such  coupons  being  properly  presented  for  payment  thereon, 
only  as  a  part  of  the  bond  with  which  they  were  issued,  and  are 
included  in  the  amount  allotted  to  the  bond  as  above  stated. 

223 


The  aggregate  of  said  amounts  so  applicable  to  said  bonds 
and  coupons  is  the  sum  of  $49,692.20.  Clerk's  fees  of  one  per 
cent  on 'said  amount  is  $496.93  and  the  total  of  said  amount, 
with  the  clerk's  fees  of  one  per  cent  added  thereto,  is  the  sum 
of  $50,189.13. 

I -herewith  deposit  in  the  registry  of  this  court  in  this  cause, 
for  the  purpose  of  making  payment  of  said  several  amounts 
upon  said  bonds  and  coupons,  the  said  sum  of  $50,189.13,  by 
presenting  you  my  check  upon  the  Mercantile  Trust  Company 
of  New  York,  certified  and  payable  to  your  order,  in  said 
amount.  Yours  respectfully, 

WM;  D.  CORNISH, 

Special  Master. 


224 


INDEX 

CHAPTER  1.         Page  1  to  16 
The  History  of  the  Claim 


CHAPTER  2.         Page  16  to  ^6 

The  Summary  of  the  Records  and  Testimony  of  the  Claims 

Presented . 


CHAPTER  3.         Page  27  to  49 
Acts  of  Congress.     Report  of  Attorney  General  Only 


CHAPTER  4.         Page  50  to  89 

Blaisdell's  Statement  and  Evidence  Filed  with  the  Committee 
on  Pacific  Railways. 


CHAPTER  5.         Page  90  to  117 

Evidence  Taken  Before  Dudley  T.  Hassan,  Examiner  in 
Chancery. 


CHAPTER  6         Page  119  to  145 
Record  of  Kenosha  County  Court  of  the  State  of  Wisconsin. 


CHAPTERS  7  and  8         Page  146  to  224 

Report  of  the  Attorney  General,  Secretary  of  Interior  and 
Commisssoner  of  Railways. 


